Dhanuka Agritech - Q3 Result Updates

Financial Results & Limited Review for Dec 31, 2013
Link: Click Here

Board declares Interim Dividend:
Dhanuka Agritech Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 06, 2014 inter alia, has declared Interim Dividend @100% (Rs. 2 per Equity Share having Face Value of Rs. 2/- each) for the Financial Year 2013-14. The payment date of the Interim Dividend shall be on or before March 07, 2014.

Dhanuka to invest Rs 50cr on new plant; eyes Rs 750cr revenue: (For those who missed the news earlier)
Link: Click Here

Decent numbers given by Dhanuka Agritech in terms of sales, and a very good net profit to go with that.
Revenues stood at 167 Cr Vs 139.6 Cr YoY, a growth of 20%
Net Profit stood at 21.27 Cr Vs 11.68 Cr YoY, a growth of 82%, which was higher than expected.
Hence, EPS stood at 4.25 Vs 2.34 YoY.

For the nine months so far,
Revenues stands at 586.52 Cr Vs 451.13 Cr YoY, a growth of 30%.
Net Profit stands at 70.67 Cr Vs 46.57 Cr YoY, a growth of 51.75%.
EPS for the nine months stands at 14.13 Vs 9.31.

In the link above, as they mentioned, it seems they will be able to achieve 750 Cr revenues this fiscal. Sales of somewhere close to 165 Cr, would help them achieve the figure of 750 Cr for FY14, which doesn't look difficult as of now. To do so, they will have post a growth of 24% in sales, for the next quarter.
The net profit growth this fiscal has been remarkable, and it purely justifies the high P/E ratio for the company, when compared with its peers.

The PAT margin was seen at 12.75 this quarter. With company continuously posting a better growth in net profit than revenues, the margins will continue to impress, and it seems, they should be able to achieve PAT margins of at least 12.5% for FY14, whereas it was close to 11% last year. Once they gain more and more popularity among farmers, it won't be difficult for them to post PAT margins in the range of 15-20%, in future, as they will save plenty required in brand building.

According to company's Managing Director M K Dhanuka: "During this quarter, despite the weak economic environment, we have achieved superior sales growth. Our new products have been enthusiastically received by farmers and continue to gain market share. South and West zones are our key markets and have done well. We are happy that our branding initiatives, including advertisements featuring Amitabh Bachchan as Brand Ambassador have helped us achieve this sustainable growth and we are confident of achieving even better growth in future."

My Views:
Going by the numbers, one would feel that 20% growth in sales, is not that great, but understanding the nature of business they are in, its very difficult to achieve such growth also, in off-season. Still, they have plenty of scope to improve, and their brand building expense, will help them achieve further growth. Good dividend is being paid by the company twice a year, which will bring more stability to stock price.
I personally feel, that, in off-season quarters, people will find plenty of opportunities to enter the stock, as the interest among the traders and investors would be lesser in these quarters. Hence some dips in between are inevitable.
Recommending a hold for those who are already invested, and suggesting a buy on dips strategy for those who are looking for new entry. But always make sure to study things yourself, before taking such decisions. :-)