Dhanuka Agritech Ltd (Q2 FY15) – BUY

Dhanuka Agritech Ltd (Q2 FY15) – BUY
CMP Rs511, Target Rs800, Upside 56.5%

• Q2 FY15 PAT grew 30.2% yoy well above our estimates on the back of improvement in gross margins and strong operating performance.
• Revenue stood at Rs.2,833mn, in line with our expectation of Rs2,825mn.
• Gross margins expanded by 197bps yoy to 37.5% driven by better product mix and stable RM cost of specialty products.
• Operating margins at 19.5% came as a positive surprise; beat our expectations of 16.7%.
• Outlook remains strong; Maintain Buy with a 24-month price target of Rs800.

Bharat Forge (Q2 FY15) – BUY

Bharat Forge (Q2 FY15) – BUY
CMP Rs885, Target Rs1,250, Upside 41.2%

• Revenues at Rs11.4bn higher by 34.7% yoy; better than our estimates
• Tonnage volumes surged 22.8% yoy and 7% qoq
• Realizations were higher by 9.7% and 7.7% qoq
• OPM at 28.5% was higher by 217bps yoy, on the back of benefits of operating leverage and better product mix, favorable product mix
• PAT at Rs1.8bn jumped 81% yoy and 20% qoq was substantially better than our estimates
• Outlook for domestic auto business is improving but will take time to stabilize, while non-auto business should see large opportunities from the Make in India campaign, Outlook for US market is robust
• Maintain our BUY rating with a 2-year price target of Rs1,250