Elara Securities has upgraded Dhanuka Agritech from Accumulate to Buy with a revised target price of ₹1,372, down from the earlier target of ₹1,628. According to reports from The Hindu BusinessLine, the broker maintains a current market price of ₹1,049.30, representing a potential upside of approximately 31% from current levels. The revision reflects the company's challenging Q3 performance and updated financial projections based on 9MFY28E earnings estimates. The target price is based on 17x 9MFY28E EPS of ₹80.7, as the broker rolls forward to 9MFY28E financials.
The company reported weak Q3 performance with profitability impacted by negative operating leverage as topline declined 8% year-on-year. As reported by The Hindu BusinessLine, Dhanuka Agritech bore the brunt of a weak agro-chemical demand environment, with excess rainfall and subdued crop prices impacting pesticide consumption. The challenging market conditions have created headwinds for the agro-chemical sector, affecting the company's operational metrics during the quarter.
The company commercialised its second technical molecule from its technical plant at Dahej in Gujarat during Q3FY26, generating revenues of ₹4 crore. According to reports from The Hindu BusinessLine, Q3 represents an off-season quarter for both Bifenthrin and Difenoconazole, contributing to the muted revenue performance. The Difenoconazole production was delayed into November-December but is now fully operational, with management expecting sharp improvement from Q4FY26. Management anticipates meaningful revenue contribution commencing in Q4 with the technical plant operations.
The MPP-2 plant at Dahej is in the final planning stage and is expected to be concluded by FY26-end, with a capex of ₹6-7 crore required for completion. As reported by The Hindu BusinessLine, the company has a strong launch pipeline in FY27, with three new products planned including two fungicides under the 9(3) registration route targeted at key crops such as grapes, potato, tomato and chilli, along with a spray enhancer for the tomato segment. The company expects 80% capacity utilisation targeted for FY27 across Bifenthrin, Difenoconazole and Iprovalicarb, indicating improved operational efficiency ahead.
The stock has corrected about 45% in the past nine months, with current valuations at 12.8x FY28E EPS considered compelling by market analysts. According to reports from The Hindu BusinessLine, the earnings outlook depends on the trajectory of monsoon and its impact on agro-chemical consumption. The management expects 80% capacity utilisation targeted for FY27 across Bifenthrin, Difenoconazole and Iprovalicarb, indicating improved operational efficiency ahead. The broker's upgrade reflects confidence in the company's technical plant operations and future product pipeline despite current market challenges.
