DHANUKA - Dhanuka Agritech Ltd. Share Price

In the earnings conference call held on May 16, 2025, Dhanuka Agritech's management provided an optimistic outlook for the company. They reported a revenue milestone exceeding Rs.2000 crores, achieving Rs.2035.15 crores in FY'25, which represents a growth of 15.73% year-on-year. The EBITDA for the fiscal year stood at Rs.416.61 crores, marking a 27.23% increase, and the EBITDA margin improved from 18.62% in FY'24 to 20.47% in FY'25.

Key forward-looking points shared include:

1. Revenue Guidance: Management anticipates higher double-digit revenue growth for FY'26, supported by positive monsoon forecasts at 105% of Long Period Average (LPA), which is likely to encourage planting.

2. New Molecules Contribution: The acquisition of international rights for two key fungicide molecules, iprovalicarb and triadimenol, is expected to contribute approximately Rs.110 crores in FY'26, alongside an anticipated royalty income of Rs.15-20 crores.

3. Manufacturing Growth: The performance from the Dahej facility is projected to advance from Rs.40 crores in FY'25 to Rs.60 crores in FY'26. The existing plant is also set to start production of a new fungicide expected to generate revenue of around Rs.10 crores.

4. Cost Management: Despite recent cost pressures in raw materials, management commits to passing on increases to customers, which should help maintain margins.

5. Dividend Declaration: The Board has recommended a 100% dividend, amounting to Rs.2 per equity share, further reflecting their commitment to return value to shareholders.

Overall, management expressed confidence in Dhanuka's continued growth trajectory, driven by product innovation and strategic positioning for both domestic and international markets.

Question 1: Given that our base has reached and crossed Rs.2000 crores, what is the revenue growth and EBITDA margins that we are looking at for FY'26?
Answer: We expect to achieve higher double-digit revenue growth in FY'26. Regarding our EBITDA margins, we anticipate they will remain similar to the previous year due to expected cost pressures from raw materials. The initial monsoon forecast appears positive, which further supports our optimistic growth outlook.

Question 2: What has been the Dahej facility's performance during FY'25 in terms of revenue and EBITDA?
Answer: The Dahej facility generated revenue of Rs.40 crores in FY'25 with a similar negative EBITDA of Rs.14 crores. For FY'26, we predict revenue growth to Rs.60 crores, but EBITDA will likely follow similar lines.

Question 3: Can you give a breakup of B2B and B2C sales for FY'25 and Q4?
Answer: In FY'25, B2B sales constituted approximately 9% of total revenue, while B2C sales made up 91%. This is a notable increase from the previous year's B2B figure, which was about 4%.

Question 4: What new molecules are being introduced at the Dahej plant, and what is the expected break-even utilization level?
Answer: We plan to introduce a fungicide at the Dahej facility, anticipating revenue of around Rs.10 crores from this product. To achieve positive EBITDA, we need to reach a capacity utilization of 70% to 80%.

Question 5: What is the total addressable market (TAM) for the two fungicides acquired through Bayer, and what incremental revenue do you expect from them in FY'26 and FY'27?
Answer: The TAM for both molecules is approximately $100 million. We are projecting combined revenue of Rs.110 crores from these products for FY'26, which includes both India and international sales.

Question 6: What guidance do you have for revenue growth and margin expansion in FY'26?
Answer: We are expecting higher double-digit revenue growth for FY'26. However, we anticipate a 100-basis point reduction in gross margin due to rising raw material costs, while the EBITDA percentage is expected to remain stable.

Question 7: How will you manage the increase in raw material costs to sustain margins?
Answer: We will pass on raw material cost increases to customers, which is our usual practice. Our upgraded product portfolio and strong sales strategies will help sustain our margins amid rising costs.

Question 8: What are your plans for the cash position, especially post-acquisition?
Answer: We have a healthy cash position, which we will continue to manage through dividends and buybacks. We remain keen on identifying strategic opportunities for inorganic growth in the future.

Question 9: Will you be looking to acquire further products to enhance your portfolio?
Answer: Yes, we are open to acquiring products if good opportunities arise, particularly in both domestic and international markets. This aligns with our commitment to long-term growth.

Question 10: What is your expectation regarding trade receivables and inventory in the upcoming quarter?
Answer: We expect trade receivables to decrease significantly in Q1, aligning with our projections. Overall, we believe our inventory management will remain healthy, supporting our revenue growth strategy.

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