DHANUKA - Dhanuka Agritech Ltd. Share Price

The management of Dhanuka Agritech Limited provided an optimistic outlook during the earnings call held on August 1, 2025, for the quarter ended June 30, 2025. They highlighted a growth trajectory despite challenges faced in the first quarter due to a delayed monsoon and cautious purchasing behavior from farmers. The revenue from operations reached INR 528.29 crores, up 7% from INR 493.58 crores year-on-year. EBITDA increased to INR 83.19 crores, compared to INR 71.72 crores from the previous year. Profit after tax also rose to INR 55.5 crores, up from INR 48.89 crores.

Management emphasized their goal of achieving double-digit revenue growth for the full year, guided by an anticipated recovery in demand as monsoon conditions improve. This optimistic sentiment is bolstered by a favorable forecast for above-normal monsoon rainfall across India for the Kharif season. They also confirmed that profitability would see an approximate decline of 100 basis points in EBITDA margin due to expected changes in product mix and prices. Capacity utilization for their production facilities is expected to reach around 60%.

The Dahej plant is anticipated to generate revenue of INR 65 crores this financial year. The company has launched a new herbicide, "Dinkar," in collaboration with Hokko Chemical Japan, with positive early feedback from farmers. Additionally, two more products are planned for introduction in the latter half of FY '26. The management expressed confidence in the agricultural sector's recovery, positioning Dhanuka to leverage its expanding product and service offerings to meet farmers' needs effectively.

Major Questions and Answers from the Q&A Section:

1. Question: "Despite monsoon being early, why are we not seeing significant growth in Q1, in terms of revenues?"
Answer: "The initial rains in May were not conducive and led to resowing for critical crops like soybean and cotton. This mismatch in crop cycles affected our sales. Hence, we observed subdued demand leading to only a 7% revenue growth."

2. Question: "Are we sticking to the full year guidance in terms of revenue and EBITDA margin?"
Answer: "Yes, we are committed to achieving a double-digit revenue growth. For the EBITDA margin, we anticipate a decline of about 100 basis points this financial year."

3. Question: "Could you share capacity utilization at our technical plant?"
Answer: "For this year, we expect our overall capacity utilization to be around 60%, and we project revenues from the Dahej plant to be approximately INR 65 crores."

4. Question: "What was the B2B sales and EBITDA in Q1?"
Answer: "The B2B sales contribution isn't significant, and our royalty income from Bayer products for Q1 stood at around INR 9 crores."

5. Question: "How is the liquidation so far in July compared to Q1?"
Answer: "July has shown better consumption levels compared to Q1, although inventories from the previous quarter are still impacting the net effect."

6. Question: "How has pricing pressure been influencing our margins?"
Answer: "While we've seen stable or increasing pricing in some products, overall, we expect a 100 bps decline in EBITDA margins this year due to changes in the product mix and previous technical price advantages no longer benefiting us."

7. Question: "How do you see the demand improving for the rest of the quarter?"
Answer: "The intensified rainfall has resulted in a significant rise in fungicide consumption and should lead to increased insecticide sales as well. We expect a strong demand surge in the forthcoming period."

8. Question: "Can you discuss the potential for growth based on product launches?"
Answer: "We've launched 'Dinkar,' a paddy herbicide, and are set to introduce 'Kinzan,' targeting grapes and potatoes, among others. These products will drive our growth going forward."

9. Question: "What is the export registration status?"
Answer: "Currently, we have one product, bifenthrin, registered in 6-7 countries, and we're working towards introducing another product by H2 this year."

10. Question: "What are the details regarding the decrease in investment value in IoTechWorld Avigation?"
Answer: "The markdown in investment value from INR 31 crores to INR 22.5 crores reflects a loss based on a mark-to-market valuation report."