Dhanuka Agritech - Buy At Declines


Results for the quarter ended 31.12,11 for Dhanuka Agro are due at any time from now. Will it post good results? A clue can be obtained if we see its results for the quarter ended 31.12.10.

M/S. Dhanuka Agritech Ltd has reported good results for the quarter ended 31.12.10. According to unaudited figures, sales and income have increased by 17.7% to Rs.11310.79 lacs. Other income jumped from Rs.3.56 lacs to Rs.172.33 lacs. As a result, total income increased by 19.5% to Rs.11483.12 lacs.

Stock in trade and work in progress increased by 203% to Rs.2034.12 lacs.

Total expenditure increased by 40.6% to Rs.11952.7 lacs from Rs.8497.23 lacs. Profit before tax from operations increased by 34.7% to Rs.1,564.54 lacs from Rs.1,160.87 lacs. Net profit after tax from operations of the company increased by 46.3% to Rs.1,242.17 lacs from Rs.848.97 lacs. Paid up capital stands at Rs.917.89 lacs as on 31.03.2010 as against free reserves amounting to Rs.8,794.39 lacs.

For the 9 months period ended 31.12.10, net sales and income from operations increased by 21.6% to Rs.35,909.67 lacs from Rs.29,526.70 lacs (last year’s actual figures Rs.40,752.67 lacs). Other income jumped from Rs.18.90 lacs to Rs.647.95 lacs – an increase of more than 3000%. Total income increased by 23.7% from Rs.29,545.60 lacs to Rs.36,557.62 lacs. Stock in trade and work in progress collectively increased by 136.9% to Rs.4,482.77 lacs from Rs.1,891.94 lacs.

Total expenditure increased by 25.3% from Rs.28,013.97 lacs to Rs.36,118.53 lacs. Profit before tax increased by 43.7% from Rs.3,423.57 lacs to Rs.4,921.86 lacs. Profit after tax increased by 46.7% from Rs.2,553.05 lacs to Rs.3,745.09 lacs (last year’s actual figures Rs.3,633.75 lacs).

Return on net worth stands at a healthy 51%. Return on equity is at a staggering 499%. Price earning ratio is at a healthy 9.98. The shares of the company are traded in the stock exchange at Rs.70.90 as on 03.02.11 (NSE). Volume generated is at 54,000 with 108 trades being reported. 52 week high and low are at Rs.468 and Rs.103 respectively.

Before comparing the present price with the 52-week high and low figures, we have to remember the fact that the company split its shares and decreased the face value from Rs.10 to Rs.2. If we factor this, then the 52-week high and low should be read as Rs.93 and Rs.20 respectively. The record date for the purpose of splitting the shares was fixed 04.09.2010.

Even though the company has presented a healthy result and the sector in which it operates is doing well right now, investors can wait for the shares to come down to around Rs.50 with the general decline of the stock indices and hold for medium term to reap a good profit.

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