Dhanuka Agritech is the second largest Indian agrochemicals formulation company, which is engaged in manufacturing of a wide range of agro-chemicals like herbicides, insecticides, fungicides, miticides and plant growth regulators of various forms.
Outlook and Valuation: We believe Dhanuka’s strong product portfolio of over 80 brands with two third sales coming from Specialty molecules coupled with widespread distribution network and increased new launches makes this stock an attractive bet. The company has an asset light business model with robust operating cash flows, negligible debt levels and healthy return ratios. Further, increased budgetary allocation by the government towards agriculture sector, hike in MSP of crops and good monsoon augurs well for the demand outlook. Hence, we recommend ‘BUY’ rating on the stock with a target price of Rs 618 based on 20x FY20E EPS.
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