DHANUKA - Dhanuka Agritech

📊 NSE: DHANUKA 🏢 Pesticides / Agrochemicals - Indian 📅 Last Updated: 12/13/2025 21:30

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for H1 FY26 grew 2.1% YoY to INR 768.38 Cr compared to INR 752.56 Cr in H1 FY25. For Q2 FY26, consolidated revenue was INR 384.34 Cr, a slight decline of 2.58% from INR 394.55 Cr in Q2 FY25. The Dahej B2B segment contributed approximately INR 22 Cr in revenue during the quarter.

Geographic Revenue Split

Revenue is well-distributed across India, with meaningful contributions from the South, West, North, and East regions. This balanced presence provides stability against regional demand weaknesses caused by localized climatic variations.

Profitability Margins

The Net Profit Margin for the quarter ended September 30, 2025, stood at 13.31%. Historically, the company has maintained healthy PBILDT margins between 15-19% annually. Consolidated Net Profit for Q2 FY26 was INR 66.95 Cr, down 9.9% from INR 74.34 Cr in Q2 FY25.

EBITDA Margin

The PBILDT margin was 18.63% in FY24. Management expects a near-term impact of approximately 100 basis points on EBITDA margins due to the integration of Bayer molecules and current market challenges. The company aims to achieve positive EBITDA for the Dahej facility by FY27.

Capital Expenditure

The company has invested significantly in a technical manufacturing facility at Dahej, Gujarat, for backward integration. While specific current capex figures for FY26 are not detailed, the facility is a key driver for future revenue growth and margin expansion through the production of active ingredients.

Credit Rating & Borrowing

The company maintains a 'Stable' outlook with a strong financial risk profile. It has an exceptionally high interest coverage ratio of 81.50x (FY25) and a low overall gearing of 0.06x as of March 31, 2025. Total debt to Gross Cash Accrual (TD/GCA) stood at 0.21x in FY25.

⚙️ Operational Drivers

Raw Materials

The company utilizes technical grade chemicals and active ingredients for its formulations. Specific raw materials include active ingredients for herbicides, fungicides, and insecticides. Imports account for 25% to 35% of total raw material requirements.

Import Sources

Raw materials are imported from international markets including the USA, Japan, and China. Domestic sourcing is also utilized to support its formulation business.

Key Suppliers

Dhanuka maintains strategic technical tie-ups with major MNCs, most notably Nissan Chemicals, which contributes approximately 40-45% of the company's revenue. It also recently acquired brands from Bayer Crop Science.

Capacity Expansion

The Dahej plant in Gujarat represents a major shift toward technical manufacturing and backward integration. The company is currently ramping up this facility to manufacture its second active ingredient, aiming for revenue scalability in FY26 and EBITDA breakeven by FY27.

Raw Material Costs

Raw material costs are susceptible to global price volatility and currency fluctuations. The company lacks a formal hedging policy for its 25-35% import component, exposing it to foreign exchange risks.

Manufacturing Efficiency

Efficiency is currently impacted by the underutilization of the newly commissioned Dahej plant. Improving capacity utilization at this facility is a key monitorable for supporting operating leverage and reaching profitability targets.

Logistics & Distribution

Distribution costs are a function of its wide reach across four regional hubs and multiple warehouses serving a vast network of retail points.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth will be driven by backward integration at the Dahej plant, increasing the contribution of new 9(3) molecules (which were 13.29% of revenue in FY24), and the acquisition of global rights for brands like Melody Duo and Triadimenol from Bayer. The company is also expanding its B2B and export foothold.

Products & Services

The company sells crop protection products including Herbicides, Fungicides, Insecticides, and Biostimulants.

Brand Portfolio

Key brands include Melody Duo and Triadimenol (acquired from Bayer), along with various specialty molecules developed in partnership with Nissan Chemicals.

New Products/Services

New molecules contributed 13.29% of revenue in FY24. The company continues to launch powerful products in the herbicide and fungicide segments, alongside new biostimulant products to drive growth.

Market Expansion

Dhanuka is expanding its presence in the B2B domestic market and increasing its export foothold to diversify beyond the domestic B2C formulation business.

Market Share & Ranking

Dhanuka is a leading player in the Indian agrochemical formulation industry with a track record of over three decades.

Strategic Alliances

Strategic alliances exist with Nissan Chemicals (contributing 40-45% of revenue) and other MNCs for developing and marketing specialty 9(3) molecules.

🌍 External Factors

Industry Trends

The industry is shifting toward technical manufacturing and backward integration to combat global price volatility. There is an increasing focus on specialty molecules and biostimulants, though the latter faces recent regulatory scrutiny (July 2025 stay).

Competitive Landscape

The industry is highly competitive and regulated, featuring both large MNCs and domestic generic players. Dhanuka differentiates itself through specialty molecules and technical partnerships.

Competitive Moat

The moat is built on long-term technical tie-ups with MNCs like Nissan Chemicals and a massive distribution network. These advantages are sustainable due to the high entry barriers in developing 9(3) molecules and the time required to build a pan-India retail reach.

Macro Economic Sensitivity

The business is highly sensitive to agricultural GDP and monsoon performance, as rural demand dictates the consumption of crop protection chemicals.

Consumer Behavior

Farmer demand is shifting toward higher-quality specialty chemicals that offer better crop yields and protection, supporting Dhanuka's focus on new molecule launches.

Geopolitical Risks

Trade dynamics with China, Japan, and the USA are critical due to import dependencies. Regulatory changes or trade barriers in these regions could impact raw material availability.

⚖️ Regulatory & Governance

Industry Regulations

The company faces significant regulatory risks, including potential government bans on specific molecules. In July 2025, the government imposed a stay on bio-stimulants, although the impact on Dhanuka was expected to be limited due to the segment's small revenue share.

Environmental Compliance

As a chemical manufacturer, the company must comply with stringent pollution control norms, particularly for its technical manufacturing facility in Dahej.

Taxation Policy Impact

The company is subject to standard corporate tax rates in India; specific fiscal incentives for the Dahej plant were not detailed.

Legal Contingencies

The company is subject to ongoing regulatory monitoring regarding molecule safety and environmental impact, typical for the agrochemical sector.

⚠️ Risk Analysis

Key Uncertainties

Climatic variations (monsoon) and regulatory changes (molecule bans) are the primary uncertainties. A sharp decline in revenue or operating margins falling to 10-12% would materially impact cash generation.

Geographic Concentration Risk

Revenue is well-balanced across India, reducing the risk of total revenue loss from a single regional weather event.

Third Party Dependencies

There is a high dependency on MNC partners like Nissan Chemicals for technical supplies and product development, representing 40-45% of revenue.

Technology Obsolescence Risk

The shift from generics to specialty molecules and biostimulants represents a technological evolution; Dhanuka is addressing this through its R&D and MNC tie-ups.