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Q2FY22 outcomes of Dhampur Sugar Mills
In response to ICICI Direct “Consolidated income witnessed de-growth of 18.1% to Rs 762.5 crore on account of 27.4% dip in sugar gross sales resulting from 33.6% decline in sugar volumes. The corporate bought 1.44 lakh tonnes (lt) of sugar in the course of the quarter. Nevertheless, sugar costs began transferring up from August 2021 onwards, which resulted in 3.9% improve in sugar realisation to Rs 34.6/kg. The present prevailing costs are Rs 36/kg.”
The brokerage has mentioned that the corporate’s “Distillery (ethanol, chemical, nation liquor) gross sales witnessed development of 41.7% on account of upper 5.5% improve in ethanol volumes, 10% improve in ethanol realisation with larger proportion B-heavy ethanol. Out of the whole 3.09 crore litre of ethanol, B-heavy ethanol was 2.93 crore litre (95%) & 0.16 crore litre was C-heavy ethanol. Chemical enterprise volumes have additionally elevated by 7% to 66.6 lakh kg with 70.8% improve in common realisation.”
“The corporate is holding 1.88 lakh tonnes of sugar valued at 29.47 / kg. With prevailing sugar costs at Rs 36 / kg, DSL would have the ability to make Rs 6.5/kg margin in Q3FY22. We consider the corporate would have the ability to exhaust 2020- 21 sugar stock by January 2022” says the brokerage.
“Working revenue witnessed de-growth of 8.4% to Rs 66 crore impacted by decrease sugar gross sales volumes. Nevertheless, working margins improved 100 bps to eight.7% aided by enchancment in sugar costs, larger distillery volumes & uptick in distillery realisation. Curiosity value was down 15.6% to Rs 17.8 crore with discount in debt & decrease rates of interest. PAT dipped 4% to Rs 26.7 crore and EBITDA was at Rs 66 crore, dip of 8.4% YoY, with margins at 8.7%” says ICICI Direct.
Key triggers for future value efficiency of Dhampur Sugar Mills in response to ICICI Direct
- DSL is growing its ethanol capability by 2x to 22 crore litre by FY24, which might end in distillery gross sales CAGR of 24% to Rs 1535.4 crore in FY21-24E. The corporate generates 35% of its revenues from the distillery enterprise.
- The corporate could be growing its sugarcane crushing by 5-10% within the subsequent one 12 months. This is able to assist it utilise the extra sugarcane for the manufacturing of ethanol by sugarcane juice.
- We count on cumulative free money circulate of Rs 656 crore within the subsequent three years, which would cut back the debt ranges and drive earnings development.
Purchase Dhampur Sugar Mills with a goal value of Rs 430 / share
ICICI Direct has reported that “The sugar business goes by a change from a cyclical business to a structural development sector by growing distillery capacities over the subsequent three years. The business has been in a position to scale back the sugar inventories from 14.5 million tonnes in September 2019 to eight.2 million tonnes in September 2021 by aggressive exports & diversion of sugarcane in direction of ethanol manufacturing. This has resulted in uptick in home sugar costs from Rs 32-33/kg ranges to Rs 37/ kg in final 4 months.”
“DSL’s share value has gone up 2.7x within the final 5 years (from Rs 113 in November 2016 to Rs 308 in November 2021). We count on 2x improve in distillery volumes to spice up earnings with a CAGR of 18% throughout FY21-24E. We consider agency sugar costs & growing ethanol capacities would end in robust earnings development over the subsequent three years. Dhampur Sugar could be demerged into two separate entities with equal belongings. The resultant firm ‘Dhampur Bio Organics’ would record on exchanges with mirror shareholding. We keep our BUY advice on the inventory with a goal value of Rs 430 / share (earlier Rs 500)” mentioned ICICI Direct in its analysis report.
Disclaimer
This inventory is picked from the brokerage report of ICICI Direct. Investing in equities poses a danger of economic losses. Traders should subsequently train due warning. Greynium Info Applied sciences, the creator, and the brokerage home should not responsible for any losses prompted on account of selections primarily based on the article.
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