Dhanuka Agritech Ltd - Is it too late or sometimes it's never too late?

An Appreciation of 118% in past 2 years, but sometimes, its never too late, especially in fundamentally strong stocks. The major benefit in such investments is that we almost eliminate the risk of losing over money over a period of time. Even if you see the strong stocks falling, use that opportunity to buy more, as the company will surely hit the interests of big investors in times to come. We have seen such scenario earlier with Ajanta Pharma, Cera Sanitaryware, Dewan Housing, to name a few.

Dhanuka Agritech Limited manufactures a wide range of agrochemicals like herbicides, insecticides, fungicides, miticides, plant growth regulators in various forms – liquid, dust, powder and granules. The Company has a pan-India presence through its marketing offices in all major states in India, with a network of more than 7,000 distributors/ dealers selling to over 75,000 retailers across India and reaching out to more than 10 million farmers. The Company has technical tie-ups with 4 American, 5 Japanese & 2 European Companies.

Talking about valuations, I understand that stock has done too much in past already, but the company is not sitting with same set of products, it is putting continuous efforts to build its product portfolio, by introducing new products every year. The company launched 4 new products in FY13, 3 so far this year. According to management, they are planning to launch at least 2 new products every year going ahead.
Company is right now trading above industry P/E, but I expect margins to improve going ahead in the long run.

The company has already started work on its new facility at Keshwana, Rajasthan, which is expected to be commissioned in Q3 of FY15, which is a year away from now.

Talking about Q2 numbers, the revenues grew by 23% and net profit grew by 36% on back of good monsoon this year.
Overall result of H1 FY14, shows growth of 34% in revenues and 42% in net profit over H1 FY13.

Talking about scope, I found some stats from HDFC Securities report, which says, that although India has the largest area under cultivation in crops such as paddy and wheat, it is lagging behind in total production. As much as Rs.1.2 lakh crores worth of potential crop production in India is destroyed due to insects, fungus and weeds.
It has been estimated that the country is losing food grain production worth Rs.2.5 lakh crore per annum. At present, the pesticide use is only for a few crops and in a few States only. Thus, there is a vast scope for expansion in area and crops under assured plant protection coverage.

Few recent Achievements:
1) The company has been assigned 4/5 Fundamental grade by CRISIL, which suggests superior fundamentals of the company.
2) The company has been presented precious award for branding excellence in Agrochemicals by ABP News during 22nd World Brand Congress.
3) For the 3rd time in past 4 years, the company has bagged a coveted place in prestigious "Forbes Asia - 200 Best Under A Billion" list in Asia Pacific region

The company has taken many initiatives to strengthen its brand image like signing Amitabh Bachchan as brand ambassador of their company.

The management has a strong vision of achieving revenues of 1000 Cr by FY16.

Latest Ad Of Dhanuka Agritech (Just a latest ad, plenty more available on youtube):
httpv://www.youtube.com/watch?v=SohnelnwQIk

Stock Price Estimates:
Being a stock in agrochemicals sector, the major revenues are generated in Sept Qtr of every year. Remaining quarters are slightly subdued on account of lesser demand. Taking that into account, I expect the total revenues for FY14 to be somewhere above 700 Cr, which would be great. If that happens, and we have good monsoon in next 2 year also, I don't doubt management saying that they will achieve 1000 Cr revenues in FY16.
Keep in mind that stock is trading above its industry P/E. Kindly do all required analysis from your side before investing.

Note:
I am closely tracking JB Chemicals & Pharmaceuticals, Vardhman Textiles, Plastiblends and few other stocks, which are looking good for long term investments. Will come up with separate post on those stocks very soon, if everything seems fine about them.