Dharmaj came with good set of results with sales growing by 14% and profits by 44%. These results are especially good given the weak agchem scenario currently. Their technical plant will be online this quarter, which might lead to subdued numbers for the next few quarters (depreciation costs + plant operating costs). Concall notes below.
FY24Q2
- Sayakha plant will be commissioned in November, it witnessed some cost overruns (cost escalations + additional equipment in MPP to improve product mix). Increased cost from 200 to 220 cr. Expect 10% utilization in FY24 and full utilization by FY27
- Will do external sales of ~600 cr. from plant + 100-150 cr. of internal consumption
- Inventory management: Purchase technical at the end to reduce price volatility risk
- 90-120 days receivable cycle. Increased receivables this quarter was because of higher sales in August which will be realized in October
- Have seeded smaller volumes to Rallis this year, expect higher growth in next year
- Fire incidence was minor and brought under control in half hour, not much losses
- CTPR: have got 9(4) registration to manufacture technical
- Technical pricing: have to compromise on prices in older molecules, but in newer molecules (such as CTPR), don’t expect lower pricing
- Gujarat, MP, Maharashtra are established markets for Dharmaj
- Farmer reach: 3L currently
- For any new product, 1st year is for field level demonstrations for demand generation, and 2nd year is for selling volumes
- Fixed costs for technical plant: 40-50 cr. in FY25 + Depreciation will be 24 cr.
- Hoping to do 60-65 cr. PBT in FY25
Disclosure: Invested (position size here, no transactions in last-30 days)