Q3FY21 Result Update - Dhampur Sugar - ICICI Direct

Dhampur Sugar posted a strong set of results with 36% revenue growth & 22.2% growth in operating profit. The healthy growth was led by higher sugar & distillery volumes. Further, distillery realisation also improved significantly on account of higher proportion of B-Heavy ethanol. Sugar volumes were up 33.9% to 2.45 lakh tonnes (lt) aided by higher domestic sales quota whereas distillery volume were up 70.4% to 3.2 crore litre on the back of high availability of molasses due to extended 2019-20 crushing season. The company is holding 1.87 lt of sugar valued at Rs. 30.5/kg as on December 31, 2020. The government announced export subsidy of Rs. 6/kg for 6 million tonnes (MT) of sugar. The company has been allotted 1.56 lt of export quota, which has been already contracted at the average price of ~Rs. 25.1/kg (excluding export subsidy). The higher proportion of B-heavy volumes aided profitability. Interest cost dipped 37.1% with significant reduction in debt. However, PAT grew at a slower pace due to increased income tax provisioning during the quarter.

Valuation & Outlook

Dhampur would be commissioning new 100 KLD distillery by November-December 2021. After the capex, the company would have total 500 KLD distillery capacity. This capacity addition would eliminate the dependency on sugar exports. Further, higher distillery volumes from sugarcane juice, B heavy molasses would aid earnings growth. We maintain our BUY rating on the stock with a revised target price of Rs. 210/share (earlier Rs. 175).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Dhampur_Q3FY21.pdf

Shares of DHAMPUR SUGAR MILLS LTD. was last trading in BSE at Rs.169.5 as compared to the previous close of Rs. 168.95. The total number of shares traded during the day was 27034 in over 545 trades.

The stock hit an intraday high of Rs. 171.85 and intraday low of 169.05. The net turnover during the day was Rs. 4597531.

Source : Equity Bulls

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