Dhanuka Agritech Limited announces a capital-allocation move

Assuming full subscription, the buyback would reduce the share count by 500,000 equity shares, or 0.50 lakh shares. The company has set the offer at Rs 1,400 per share for an aggregate Rs 70 Crores ^[1].

Using FY26 standalone PAT of Rs 287.24 Crores ^[2] and diluted EPS of Rs 63.72 ^[3]:

• Implied pre-buyback shares: approximately 4.51 Crores
• Post-buyback shares: approximately 4.46 Crores
• Estimated reduction: approximately 1.11% of outstanding shares
• EPS after buyback: approximately Rs 64.43
• EPS accretion: approximately Rs 0.71 per share, or 1.12%

Calculation:

• Implied shares = Rs 287.24 Crores / Rs 63.72 = 4.51 Crores
• Post-buyback EPS = Rs 287.24 Crores / 4.46 Crores shares = Rs 64.43

This is a mechanical estimate assuming PAT remains unchanged and excludes any reduction in interest or other income from deploying Rs 70 Crores. The disclosed 4.20% relates to paid-up equity capital and free reserves, not directly to the reduction in the number of shares ^[1].

The current action is a clear shift from the reported historical policy of retaining all earnings, but it remains a relatively conservative recurring payout. The Rs 2 dividend implies roughly a 3.14% payout of TTM FY26 EPS, while the Rs 70 Crores buyback lifts total capital returned to approximately 27.51% of TTM FY26 PAT—close to, but still below, the approximately 29% Q4 PAT growth rate.

Capital-allocation comparison

• Historical dividend policy: The reported KPI history shows zero dividend and zero dividend payout ratio from Q4 FY25 through Q4 FY26. ^{[4] [5]}
• Current dividend: At Rs 2 per share versus Q4 FY26 EPS of Rs 21.69, the implied Q4 earnings payout is approximately 9.22%. Against TTM FY26 EPS of Rs 63.72, the recurring annualised payout is approximately 3.14%. These are derived from the reported EPS figures and the Rs 2 dividend stated in the question. ^{[6] [7]}
• Buyback: The company is offering to repurchase 500,000 shares for Rs 70 Crores at Rs 1,400 per share. The company states that this represents 4.20% of paid-up equity capital and free reserves—not 4.20% of shares outstanding. ^[1]
• Total capital return: Using TTM FY26 PAT of Rs 287.24 Crores and TTM EPS of Rs 63.72, the implied share base is approximately 4.51 Crores; Rs 2 per share therefore represents roughly Rs 9.02 Crores of dividends. Adding the buyback gives approximately Rs 79.02 Crores, or 27.51% of TTM FY26 PAT. This is a derived estimate. ^{[8] [7]}

Relative to Q4 PAT growth

Q4 FY26 standalone PAT rose 29.5% YoY, broadly the 29% growth cited in the question. ^[9] The comparison is not strictly like-for-like: PAT growth is a year-on-year change, whereas payout ratio measures the proportion of earnings distributed. Nevertheless:

• The dividend-only payout of approximately 3.14% of TTM earnings is far below the 29% earnings-growth rate.
• Including the one-time buyback, capital returned is approximately 27.51% of TTM PAT, roughly in line with but slightly below the Q4 growth rate.
• Measured against Q4 PAT alone, the Rs 70 Crores buyback plus estimated Rs 9.02 Crores dividend equals approximately 80.82% of Q4 PAT, but this overstates the burden because the buyback is a company-wide, non-recurring distribution rather than a quarterly payout.

Analyst read: Dhanuka has moved from a no-dividend framework to returning surplus cash through a combination of a modest recurring dividend and a larger one-off buyback. The distribution is meaningful in aggregate, but the dividend itself does not suggest a high ongoing payout policy. The buyback-history comparison cannot be established from the reported evidence; the clear change is from zero dividend distribution to a total return package equivalent to about 28% of TTM earnings.

As of the 31 March 2026 audited balance-sheet date, Dhanuka had conventional net cash of approximately Rs 18.03 Crores on a standalone basis: Rs 18.93 Crores of cash and equivalents less Rs 0.90 Crores of current borrowings, with no non-current borrowings. These are derived figures. ^{[10] [11] [12]}

The balance sheet also carried Rs 371.25 Crores of investments. Including these as liquid resources, net liquid assets were approximately Rs 389.28 Crores before the proposed distributions. ^[13]

Pro-forma liquidity impact

\*Assumes the outflow is funded from existing liquid assets and ignores intervening operating cash flow, taxes and transaction costs. The buyback consideration is Rs 70 Crores, with payment scheduled by 17 June 2026. ^{[1] [1]} †Derived as `(Rs 1,517.3 Cr - Rs 70 Cr) / Rs 370.59 Cr`.

If the final dividend is D Crores, the pro-forma current ratio is:

`(1,517.3 - 70 - D) / 370.59 = approximately 3.91x - 0.0027x for every Rs 1 Crore of dividend`

The final-dividend amount is not reported in the cited company material, so the exact combined outflow and post-distribution ratio cannot be calculated. Mechanically, the buyback alone consumes about 18% of net liquid assets including investments and reduces the current ratio by roughly 0.18x, but liquidity remains substantial on that broader measure. The cash-only position would turn modestly net debt-funded unless investments or subsequent operating cash flows are used. Debt leverage remains de minimis: FY26 standalone debt-to-equity was reported at 0.00x. ^[17]