Dhanuka Agritech Ltd (BOM:507717) (Q2 2027) Earnings Call Highlights: 10% Revenue Growth ...

Q & A Highlights

Q: Despite an industry-wide weak quarter, Dhanuka delivered ~10% revenue growth. What drove this outperformance, and is it sustainable? A: Rahul Dhanuka (Managing Director) attributed the growth to a deliberate, product-specific strategy for an El Nino year. The company anticipated that insecticides would outperform herbicides and fungicides, so it focused heavily on its insecticide portfolio (LaNevo, Miyako, Mortar) and plant growth regulators, channeled efforts toward regions with available water, avoided front-loading the channel in Q1, and used supply-chain agility to service demand. He cautioned that the 10% growth partly reflects a weak base and is not indicative of the remaining quarters, with full-year growth guided at low single digits.

Q: What is the outlook for margins and raw material costs for the rest of the year? A: Rahul Dhanuka (Managing Director) said raw material prices have moved both ways, and the company has selectively passed on cost increases. For the full year, he guided to low single-digit revenue growth with roughly a 100-basis-point decline in gross margin and a similar or slightly larger EBITDA decline, citing stressed demand that limits the ability to fully pass on costs. Vinod Bansal (CFO) added that excluding the GST refund impact, gross margin is broadly maintained.

Q: Which regions and crops drove growth, and which zones are key for the Rabi season? A: Rahul Dhanuka (Managing Director) noted North India (Punjab, Haryana, Western UP) did well due to canal irrigation, while South performed on the back of chili, oilseeds, pulses, and cotton. East India benefited from high vegetable prices, with insecticides like LaNevo, Decide, Mortar, and Miyako plus MYCORe SUPER and Dhanzyme Gold doing well. For Q3/Q4, he said South and East are the key zones to watch because of the returning monsoon, and the company is more confident there than in Central and Western India, where the rainfall opportunity is largely over.

Q: How did the newly launched products (LaNevo, Purge, MYCORe SUPER) perform? A: Rahul Dhanuka (Managing Director) said LaNevo, an insecticide launched with Nissan Chemical Corporation of Japan, has done very well and is a leading driver of Q2 growth, particularly in the South Indian chili belt. Purge, a soybean herbicide, was moderate and hit by poor monsoon in Maharashtra, Gujarat, and MP. MYCORe SUPER, which improves drought resilience, has gained strong farmer trust and is expected to remain a favorite in the coming quarter. The company declined to share product-specific revenue numbers.

Q: What is the status of the Bayer product arrangement and the Brazil/Europe subsidiaries? A: Harsh Dhanuka (Executive Director) clarified that the European and Brazilian subsidiaries were set up only to hold registrations, not to conduct commercial activity. On customer appointments, the company has appointed customers in about 14 countries and holds purchase orders from five countries, while discussions continue with others.

Q: What was the price-volume mix, and should investors expect higher sales returns in Q3 given channel inventory concerns? A: Vinod Bansal (CFO) said value growth was 10% versus volume growth of about 6% in Q2. He stated the company is not aggressive on channel placement, takes back material quickly, and does not expect high sales returns in Q3. Royalty income from Bayer products was about INR6.5 crore versus INR4.3 crore in the prior-year quarter.

Q: How is the Dahej plant performing, and what are the expansion plans? A: Vinod Bansal (CFO) said the Dahej EBITDA loss in H1 was about INR1.79 crore versus INR3.5 crore last year, with H1 sales of around INR55 crore. Rahul Dhanuka (Managing Director) said the company has decided to expand capacity at the existing plant, adding two new fungicide products so that FY2028 will have four products versus two currently, targeted mainly at the Indian market. He noted CapEx details will be shared later and that the investment should not be viewed on a short-term basis.

Q: How did the company avoid the high-cost inventory problem affecting the industry? A: Vinod Bansal (CFO) said the company became very conservative on purchases from July 2026, buying material at each price decrease, while some carryover inventory benefited from price increases. He acknowledged this advantage is a one- or two-quarter phenomenon and that competitors will likely catch up as supply chains normalize.

Q: What is the status of the biostimulant product launches? A: Rahul Dhanuka (Managing Director) said Dhanzyme Granule and Dhanzyme Gold Granules have already been introduced, and approval has been received for Dhanzyme Gold in liquid formulation, which will be launched in December after internal process clearance. Vinod Bansal (CFO) noted biostimulant revenue for the four Dhanzyme-branded molecules rose to INR11.7 crore in Q2 from INR8.4 crore last year, with billing so far only from two molecules.

Q: How is the ITI (new product) index trending, and what is the launch pipeline? A: Rahul Dhanuka (Managing Director) said this year is not a fair benchmark for the ITI index given the difficult El Nino conditions, and the company prioritizes farmer value over index metrics. On launches, Polin (a paddy fungicide from Nippon Soda of Japan) targets rice blast but is currently priced above what the market can absorb, so volumes are not expected near term; the company is recalibrating and will introduce more plant growth regulators and influencers in Q3.

Q: Has the fertilizer e-token system changed the practice of fertilizer companies tagging crop protection products? A: Rahul Dhanuka (Managing Director) said regulatory vigilance and execution have been sharp over the last three to four months across states like MP, UP, and Bihar, significantly curbing the tagging practice, though he could not isolate the e-token's specific influence. He added that enforcement against unregistered pesticides from smaller players still needs to improve, and that FICCI's CASCADE initiative has, for the first time, included agrochemicals in the fight against fake and duplicate products.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .