Balrampur Chini Mills - IIFL - Result Update (Q3 FY14)

Balrampur Chini Mills (Q3 FY14) - Market Performer - CMP Rs41, Target Rs43, Upside 5.5%

- Adverse operating environment characterized by high cane costs and lower sugar prices lead to an EBIDTA loss in Q3 that gets magnified in to a ~Rs500mn net loss

- Sugar division impacted by twin headwinds of fall in volumes due to late crushing (-27% yoy) as well as lower free sale realizations (-13% yoy)

- Distillery revenues jump >4x yoy on the back of similar spurt in volumes while delayed start impacted co-gen production and sales volumes though company expects better performance with increased cane crushing

- Delayed crushing has not led to any material hardening of sugar prices which combined with high cane costs continues to impact sugar profitability; we lower our FY14/15 estimates and downgrade the stock to Market Performer with revised 9-12mth target of Rs43 (earlier Rs45).

Source : Equity Bulls

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