Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dhanuka Agritech Ltd (BOM:507717, Financial) reported a significant revenue growth of 33.74% in Q1 FY25 compared to the previous year.
- EBITDA increased by 64.46% year-over-year, indicating strong operational performance.
- Profit after tax grew by 48.45% in Q1 FY25, showcasing robust profitability.
- The company introduced new products, LaNevo and MYCORe Super, which received a positive market response.
- Dhanuka Agritech Ltd (BOM:507717) has a strong herbicide portfolio, contributing to 50% of the turnover in Q1 FY25.
Negative Points
- The company experienced uneven rainfall in July, impacting herbicide liquidation.
- Despite the positive Q1 performance, the company only upgraded its annual revenue growth guidance from 18% to 20%, indicating cautious optimism.
- The Dahej plant is currently delivering negative EBITDA, affecting overall profitability.
- There were significant sales returns in July, which could impact future quarters.
- The company expects a decline of around 100 basis points in gross and EBITDA margins for the full year due to various factors, including the Dahej plant's performance.
Q & A Highlights
Q: Given the strong momentum in Q1 with 34% revenue growth, do you believe this is the right time to revise the guidance from 18% for FY25 to significantly upwards to about 25% and your margins going up by -- EBITDA margins by 21%, 22%?
A: We are upgrading our guidance from 18% to 20%. As of now, July was not a very good month due to less liquidation of herbicides and some of the June billing. We expect a little lower double-digit growth in Q2.
Q: Are you planning any 9(3) product launches in the coming quarters in the herbicide or any other segment?
A: Yes, we are planning to launch 19(3) products in Q3 of this year.
Q: How do you see the demand outlook in the herbicide segment evolving in FY26?
A: July has been a difficult month for herbicides, but after the rains in the last week of July, we expect some herbicides to pick up again. For some products, the crop stage is higher, but others like Targa Super will have a good opportunity in August.
Q: What is the status of your engagement with innovative partners for manufacturing patented technical molecules?
A: Engagement is ongoing, but we don't have any breakthroughs yet. We are working on it.
Q: How much of your revenue comes from exclusive molecule tie-ups with innovators?
A: Molecules of 9(3) types contribute around 25% of the total turnover.
Q: What is the average gross margin for patented formulations and generic formulations?
A: For generics, margins vary greatly, from around 10%-12% to 20%-25%, and some even 30%. For 9(3) products, margins are better than the average.
Q: How is the collaboration with Kimitec going, and how big can the biopesticide business be for you?
A: The biopesticide business opportunity is huge and emerging. We are in discussions with Kimitec for bringing various biological products and hope to introduce some by the end of this financial year.
Q: What is the production capacity at your formulation plant, and what is the current utilization?
A: Capacity is not a challenge as we produce different SKUs. Utilization varies with SKU, so it's difficult to calculate exact capacity utilization.
Q: When do you expect the Dahej manufacturing facility to break even?
A: We expect the Dahej facility to break even in FY27.
Q: What are the targeted markets for the molecules from Dahej, and how do you differentiate from Chinese suppliers?
A: We are targeting markets where registration is taken by the domestic distributor and have initiated registrations in the US and Brazil. We aim to position our products favorably in African, Middle East, and American markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
