Balrampur Chini - Q1FY21 First Cut - ICICI Securities

(CMP - Rs. 130; MCap - Rs. 2867 crore)

Balrampur Chini reported strong set of numbers with 50.8% increase in revenues & 24.9% increase in net profit.

Q1FY21 Earnings Summary

- Revenues were higher by 50.8% to Rs. 1430.8 crore on account of 60% increase in both sugar & distillery sales. The increase in sugar sales was aided by higher domestic quota & exports during the quarter. Our estimates suggest, the company would have sold 2.9 lakh tonnes of sugar in domestic market & 0.6 lakh tonnes through exports. The higher distillery sales was driven higher volumes as the company commissioned 160 KLD new distillery in January 2020. Moreover, distillery realisation would have also been higher with the higher proportion of B heavy ethanol

- Power sales was down by 13.5% to Rs. 95.7 crore mainly on account of lower volumes as company would have sold some quantities of bagasse during the quarter. Moreover, power realisation have remained down given revision in power tariffs last year

- Operating profit increased by 23.9% to Rs. 217.9 crore with higher sugar & ethanol sales during the quarter. Operating margins was down 330 bps mainly due to gross margin contraction. We believe average sugar realisation would have been lower compared to last year given sugar prices fell to Rs. 31/kg in April & May due to lockdown conditions imposed across country. Net profit grew by 24.9% to Rs. 139.5 crore

The company has exported ~2.8 lakh tonnes of sugar in current sugar season. Moreover, it has been able to sell higher sugar quantities in domestic market through higher sale quota. Further, sugar production for Balrampur Chini in 2019-20 sugar season not increased despite higher sugarcane availability. The company has been able to sacrifice sufficient sugar quantities through the production of B heavy molasses. We believe the company is in a position to liquidate its current season inventory by November-December 2020, which is far better position than industry (it would be carrying just a months in inventory compared to average 5 months inventory by industry). The company would see higher distillery volumes with full year of new distillery operations & higher ethanol realisation with more diversion towards B heavy ethanol. Balrampur chini is most efficient sugar company in India with no high cost long term debt & least working capital debt requirement. We remain positive on the stock.

We will be coming out with the detailed update soon.

Shares of BALRAMPUR CHINI MILLS LTD. was last trading in BSE at Rs.130.2 as compared to the previous close of Rs. 127.6. The total number of shares traded during the day was 200650 in over 3256 trades.

The stock hit an intraday high of Rs. 132.3 and intraday low of 125. The net turnover during the day was Rs. 26103292.

Source : Equity Bulls

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