Brokerage firm Anand Rathi has lowered its price target for Dhanuka Agritech to Rs 1,150 while maintaining a 'Buy' rating. The update reflects a cautious outlook for the upcoming rabi season and anticipated margin pressure, despite the company posting strong double-digit profit growth for the second quarter.
Anand Rathi has revised its price target for Dhanuka Agritech, moving it from Rs 1,180 to Rs 1,150. While the brokerage maintains a positive stance on the company, the adjustment reflects a cautious view of the near-term business environment. This shift comes as the company navigates a challenging pricing landscape for the rabi season, which is the winter cropping cycle in India.
Strong Second Quarter Performance
Dhanuka Agritech recently reported a stable performance for the second quarter of the 2027 fiscal year. The company saw its revenue grow by 9.91% compared to the same period last year, reaching Rs 657.51 crore. Profitability also improved, with the Profit After Tax (PAT) rising by 16.23% to Rs 109.22 crore. This growth was largely driven by robust demand for insecticides, which contributed 47% to the total product mix during the quarter. These gains helped the company offset a weaker performance in its herbicide segment, which faced headwinds from erratic weather patterns and accounted for 8% of the product mix.
Growth Outlook and Margin Pressures
While the recent financial results were positive, the company’s management has provided a measured outlook for the remainder of the fiscal year. They have projected low single-digit revenue growth and anticipate a margin contraction of approximately 125 basis points for the full year. This pressure on profit margins is primarily attributed to rising raw material costs and a challenging market where it is difficult to increase product prices for farmers.
On the operational front, the company is continuing to invest in its future. A key focus is the expansion of its manufacturing unit in Dahej. By the end of the 2028 fiscal year, the company plans to double the unit's portfolio to four products, with a specific focus on fungicides to capture more of the domestic market. A notable strength for the company remains its balance sheet, as it continues to operate as a debt-free entity, providing it with financial flexibility compared to many peers in the agrochemical sector.
Investors will likely track the company's ability to manage costs and maintain its product mix in the coming months. The primary monitorables will be demand patterns during the rabi season, the effectiveness of the channel inventory liquidation, and the progress of the Dahej plant expansion project.