Dalmia Bharat Sugar - Q4FY20 First Cut - ICICI Securities

(CMP: Rs. 112; Market Cap: Rs. 914 crore)

Dalmia Bharat Sugar reported Q4FY20 results with the 3.3% decline in sales & 34.3% growth in earning. The revenue de-growth is mainly on account of lower exports during the quarter. However, the company has been allocated 1.49 lakh tonnes of exports, substantial portion of that would be realized in next two quarters.

Q4FY20 Earnings Summary

- Revenue witnessed a de-growth of 3.3% to Rs. 550 crore as company sold 1.27 lakh tonnes of sugar as against 1.43 lakh tonnes in the corresponding quarter. The company received 98,000 tonnes of domestic quota in March quarter, which translate into export volumes of ~29000 tonnes. We believe the company would be exporting substantial quantities in next two quarter given its total export allocation is 1.49 lakh tonnes. Distillery volumes increased by 5.5% to 1.9 crore litres whereas power volumes remains similar at 12 crore units

- Operating profit was flat at ~Rs. 96 crore & operating margins improved by 40 bps to 17.4%. Net profit increased by 34.3% mainly due to Rs. 28 crore of impairment charges in base quarter

- On a full year basis, the company sold 4.85 lakh tonnes of sugar as against 5.31 lakh tonnes in the corresponding quarter. The de-growth is mainly on account of lower allocation of domestic quota to the mills in Maharashtra. Distillery volumes increased by 20.5% to 6.4 crore liters on account of new 100 KLD distillery commissioned in April 2019. The company sold 33 crore power units as against 38 crore in the corresponding quarter

Despite 40% decline in sugar production in Maharashtra, the company has been able to crush highest even sugarcane in Maharashtra as other millers in the catchment area would not have started crushing this season. The company has been allocated 1.49 lakh tonnes of export in the current season, a substantial portion of that would be realized in next two quarter, which would result in strong operating cash flows going forward. With the expectation of hike in MSP & continuation of exports subsidy in next crushing season, we believe the company would be able to significantly reduce its sugar inventory by March 2021. We remain positive on the stock.

We would be coming out with a detailed update soon.

Shares of Dalmia Bharat Sugar and Industries Ltd was last trading in BSE at Rs.112.85 as compared to the previous close of Rs. 104.25. The total number of shares traded during the day was 68744 in over 1919 trades.

The stock hit an intraday high of Rs. 115 and intraday low of 107.75. The net turnover during the day was Rs. 7690333.

Source : Equity Bulls

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