Dalmia Bharat Sugar - Q1FY21 Result Update - ICICI Securities

Dalmia Bharat sugar (DBSL) reported a strong performance with 51% revenue growth on the back of 57.8% growth in sugar sales, 43.7% growth in distillery sales. The company sold 2.03 lakh tonnes (lt) of sugar in Q1, 50% higher compared to corresponding quarter. Higher volumes were aided by 1.0 lt of export during the quarter. In total, DBSL has been allocated 1.75 lt of export quota in 2019-20 sugar season. Of this, it has already exported 1.27 lt and rest 0.48 lt would be exported in September quarter. In domestic sales, the company sold 1.02 lt sugar (small quantity of March quota would have been sold in Q1). Strong distillery sales were aided by 17% increase in ethanol volume to 2.3 crore litre. Power sales were down 1.3% to Rs. 78.1 crore mainly due to 10% de-growth in power volumes (sold 9 crore units). Operating profit increased 106.7% to Rs. 197 crore with higher sugar and ethanol volumes. Net profit increased 118.7% to Rs. 125.9 crore driven by higher operating profits & stable interest cost, depreciation provisioning.

Valuation & Outlook

With the optimum by-product capacities, DBSL has brought stability in earnings & cash flows. The company has investments (current & non-current) of ~Rs. 400 crore on the books. Given stable earnings, reducing working capital debt requirement & investments, the stock is trading at attractive multiple of 4.2x its FY21E earnings. We value the stock at 6x FY21 earnings with a revise target price of Rs. 160 and BUY recommendation.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_DalmiaBharatSugar_Q1FY21.pdf

Shares of Dalmia Bharat Sugar and Industries Ltd was last trading in BSE at Rs.125.1 as compared to the previous close of Rs. 123.8. The total number of shares traded during the day was 64853 in over 2158 trades.

The stock hit an intraday high of Rs. 134 and intraday low of 124.1. The net turnover during the day was Rs. 8307783.

Source : Equity Bulls

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