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Research
Q3FY21 Result Update - Dwarikesh Sugar - ICICI Direct
Posted On : 2021-02-06 10:52:13( TIMEZONE : IST )
Dwarikesh Sugar (DSL) reported disappointing results with 9.2% decline in operating profit mainly due to muted sugar realisation & rise in cost of production due to lower recoveries. Consolidated revenues saw growth of 19.3% to Rs. 381.2 crore led by higher sugar & distillery sales during the quarter. Sugar volumes were up 12.7% given domestic sales quota was higher during festive months. The company sold 1.03 lakh tonnes (lt) of sugar in Q3. However, sugar realisation dipped 2.6% impacted by late announcement of export subsidy, early start of the crushing season & higher domestic sales quota. The company is holding 1.95 lt of sugar as on December 2020. Distillery volumes were up at 0.6 crore litre but still down QoQ impacted by lower offtake from OMCs due to capacity constraints at one of the depots. Distillery realisation was also down 14.4% due to lower proportion of B heavy molasses in the quarter. Despite lower operating profit, PAT rose from Rs. 4.5 crore to Rs. 7.5 crore due to reversal of tax liability.
Valuation & Outlook
DSL is one of the efficient sugar companies with lowest cost of production given sugar recovery is beyond 12.0% in its region. However, it was facing challenges due to high sugar inventories & low distillery capacities. We believe sugar exports & capacity addition would aid revenues, earnings & cash flows going forwards. However, lower sugar recoveries remains a concern in current sugar season. We downgrade the stock from BUY to HOLD with the revised target price of Rs. 31 /share (earlier Rs. 34).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Dwarikesh_Q3FY21.pdf
Shares of DWARIKESH SUGAR INDUSTRIES LTD. was last trading in BSE at Rs.27.75 as compared to the previous close of Rs. 27.85. The total number of shares traded during the day was 43555 in over 147 trades.
The stock hit an intraday high of Rs. 28.35 and intraday low of 27.7. The net turnover during the day was Rs. 1217477.
