Q3FY21 Result Update - Dalmia Bharat Sugar - ICICI Direct

Dalmia Bharat Sugar reported a strong set of number with revenue growth of 20.1% & PBT growth of 13.5%. The healthy revenue growth was led by 17.9% increase in sugar sales led by higher domestic sales quota during festive season & 31.3% jump in distillery volumes given new capacities have been commissioned in the last one year. Operating profit was flat due to increase in FRP for Maharashtra mills & significant reduction in inventory (the company is holding only new season sugar inventory as on December 2020, which is a high cost inventory). However PBT grew 13.5% due to significant reduction in interest cost given debt levels have been considerably lower compared to last year. PAT growth of 39% can be attributed to lower tax provisioning during the quarter. The company sold 1.45 lakh tonnes (lt) and 2.1 crore litre of ethanol/ENA during the quarter.

Valuation & Outlook

With significant sugar export & diversion of sugarcane towards ethanol, Dalmia has been able to liquidate its inventories significantly. Further, higher contribution of B-heavy ethanol & increase in ethanol prices would result in strong 17.7% earnings CAGR in FY20-22E. We expect operating cash flow generation of more than Rs. 500 crore in FY21E & FY22E each & total debt reduction of Rs. 680 crore in similar period. We value stock at 6x FY22E earnings with target price of Rs. 200 (earlier Rs. 180) and maintain BUY rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_DalmiaBharatSugar_Q3FY21.pdf

Shares of Dalmia Bharat Sugar and Industries Ltd was last trading in BSE at Rs.139.45 as compared to the previous close of Rs. 141.75. The total number of shares traded during the day was 10577 in over 235 trades.

The stock hit an intraday high of Rs. 141.75 and intraday low of 138.4. The net turnover during the day was Rs. 1474409.

Source : Equity Bulls

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