Dwarikesh Sugar - Result Update - ICICI Securities

Dwarikesh Sugar reported strong sales growth on account of higher sugar volumes given the increase in domestic sales quota & larger sugar exports during the quarter. The company sold 1.22 lakh tonnes (lt) of sugar including 34,000 tonnes of raw sugar exports. Average realisation of sugar sold was Rs. 31.95/kg in Q4. Distillery sales increased from Rs. 10.8 crore to Rs. 37.1 crore led by new 100 KLD distillery capacity started in December 2019. However, power sales dipped 49% with a reduction of power tariff. Further, power volumes have also come down from 9.9 crore units to 8.5 crore units as the company prefers to sell bagasse instead of selling power at reduced tariffs.

Valuation & Outlook

The company's debt levels are comfortable given a large part of the Rs. 650 crore debt is at the concessional interest rate. We believe Dwarikesh would generate ~Rs. 300 crore of operating cash flows in the next two years, which would result in a significant reduction in high cost working capital debt. We expect strong 16.8%, 34.4% growth in revenue, earnings, respectively, during FY20-22. We value the stock at 1.2x FY21 book value with a target price of Rs. 38/share and have a BUY recommendation.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Dwarikesh_Q4FY20.pdf

Shares of DWARIKESH SUGAR INDUSTRIES LTD. was last trading in BSE at Rs.25.75 as compared to the previous close of Rs. 25.2. The total number of shares traded during the day was 194550 in over 1382 trades.

The stock hit an intraday high of Rs. 26.4 and intraday low of 23.95. The net turnover during the day was Rs. 4861613.

Source : Equity Bulls

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