At a Glance
Dhanuka Agritech’s Q1 FY26 results came like an unseasonal pest attack—Revenue ₹528.3 Cr (↑7% YoY), PAT ₹55.5 Cr (↑13% YoY), but the stock crashed -14.5% to ₹1,636 because investors wanted more “fertile” growth. OPM shrunk to 16% from 25% last quarter. Promoter stake slipped to 69.9%, adding to market jitters. With agrochemicals facing regulatory pressures and erratic monsoons, the street seems worried.
Introduction
Picture a farmer sowing seeds in dry soil—optimistic, but skeptical. That’s Dhanuka’s investor base right now. The company’s strong fundamentals (ROE 22%, debt-free) remain intact, yet the market is punishing any earnings wobble. Margins contracted, the topline barely sprouted, and despite being a lean and mean player in agrochemicals, growth feels like waiting for rain in a drought.
Business Model (WTF Do They Even Do?)
Dhanuka manufactures herbicides, insecticides, fungicides, and plant growth regulators in various formulations.
- Revenue mix Q3FY25: Herbicides 35%, Insecticides 30%, Fungicides 20%, Others 15%.
- Distribution: Pan-India with 7,000+ distributors and 75,000+ retailers.
- Moat: Brand trust, diversified portfolio, collaborations with global agro majors.
- Weakness: Heavy monsoon dependency and agro cycle volatility.
Essentially, they sell “crop insurance in a bottle,” but even pesticides can’t kill bad investor sentiment.
Financials Overview
Q1 FY26:
- Revenue: ₹528 Cr (↑7% YoY)
- EBITDA: ₹83 Cr (OPM 16%, down from 25%)
- PAT: ₹55.5 Cr (↑13% YoY)
- EPS: ₹12.18
FY25:
- Revenue: ₹2,035 Cr
- PAT: ₹297 Cr
- Margins: OPM 20%, PAT 14%
Commentary: Strong YoY growth, but sequential margin fall due to high raw material cost and lower product realizations spooked the street.
Valuation
CMP ₹1,636 | Market Cap ₹7,457 Cr
Fair Value Estimation
- P/E Method:
EPS FY25 ₹65.1 × Sector P/E 22 → ₹1,430 - EV/EBITDA:
EV ₹7,400 Cr / EBITDA ₹417 Cr → 17.7x (fair ~15x → ₹1,500) - DCF:
Growth 10%, WACC 10% → ₹1,500 – ₹1,600
Fair Value Range: ₹1,450 – ₹1,600 (current price near upper band, no margin of safety).
What’s Cooking – News, Triggers, Drama
- Monsoon Uncertainty: Will decide Q2 volumes.
- Promoter Holding: Dropped slightly to 69.9%.
- New Product Launches: Continued pipeline but market wants faster scale-up.
- Global Tie-ups: More collaborations expected to offset domestic pricing pressure.
Balance Sheet
| Particulars (₹ Cr) | Mar 23 | Mar 24 | Mar 25 |
|---|---|---|---|
| Assets | 1,405 | 1,579 | 1,800 |
| Liabilities | 1,405 | 1,579 | 1,800 |
| Net Worth | 1,361 | 1,518 | 1,680 |
| Borrowings | 34 | 27 | 74 |
Remark: Almost debt-free, balance sheet healthier than many competitors.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating CF | 136 | 134 | 263 |
| Investing CF | 3 | -81 | -143 |
| Financing CF | -137 | -57 | -120 |
Comment: Ops cash flow solid, but heavy capex/investments eating liquidity.
Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 23% | 22% | 22% |
| ROCE | 27% | 27% | 28% |
| P/E | 33x | 26x | 25x |
| PAT Margin | 14% | 14% | 14% |
| D/E | 0.02 | 0.02 | 0.04 |
Remark: Metrics are sexy, but the stock’s valuation was hotter than its earnings could handle.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 1,700 | 1,759 | 2,035 |
| EBITDA | 279 | 327 | 417 |
| PAT | 234 | 239 | 297 |
Remark: Consistent growth, but Q1 FY26 cracks show margins aren’t bulletproof.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| PI Industries | 7,978 | 1,663 | 38 |
| Bayer CropSci | 5,473 | 569 | 49 |
| Sumitomo Chem | 3,090 | 502 | 63 |
| Dhanuka Agritech | 2,070 | 304 | 26 |
Remark: Cheap compared to global MNC peers, but PI Industries outshines with better margins.
Miscellaneous – Shareholding, Promoters
- Promoters: 69.9% (slightly reduced).
- FIIs: 2.7% (increased).
- DIIs: 17.6% (stable).
- Public: 9.8%.
Promoter Bio: Dhanuka Group—old agro players with solid market reach, but not immune to price wars.
EduInvesting Verdict™
Dhanuka Agritech’s Q1 FY26 shows the classic agro-chemical problem—volatile margins, seasonal sales, and impatient investors. Fundamentals remain strong, but the valuation doesn’t give much cushion.
SWOT
- Strengths: High ROE/ROCE, debt-free, strong brand.
- Weaknesses: Seasonal demand, low dividend (0.1%).
- Opportunities: New products, export push.
- Threats: Regulatory controls, raw material inflation, monsoon risk.
Conclusion:
A fundamentally sound company facing short-term headwinds. The recent 14% price drop might make it interesting, but only if you can stomach agro-volatility. Growth is there, but it’s not the bumper harvest investors expected.
Written by EduInvesting Team | 01 August 2025
SEO Tags: Dhanuka Agritech, Agrochemicals, Q1 FY26 Results, Pesticide Stocks Analysis
