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UBS Investment Research
EID Parry (India)
Adverse weather dampen results
Loss of Rs372m on limited crushing due to extended monsoons
EID Parry (EID) reported a loss of Rs372m in Q3 FY11, against a profit of
Rs341m in Q3 FY10. This was on extended monsoon, and crushing for less than
10 days in quarter. EID reported a loss of Rs817m in 9M FY11, as compared to
Rs1.0bn profit in 9M FY10. Refining JV was also not profitable, as production
started in Sept 10, and efficiency/operations will scale up gradually. Q3 is
seasonally weak and Q4 is the big quarter.
Limited sugar production in quarter; average realisation at ~Rs27/kg
Cane crushed and sugar produced in EID was 0.08 m MT and 7,060 MT,
respectively in Q3 FY11. Consolidated cane crushed and sugar production was
0.61 mn MT and ~58kMT in Q3 FY11, and 2.02 mn MT and 0.2 mn MT,
respectively in 9M FY11. Average cane pricing for sugar season (SS) 2010-11 is
likely at about Rs1,920/MT.
Global sugar market tight on bad weather; domestic prod. at 24.5 mn MT
EID management highlighted the tight global sugar market on drought and
subsequent winds/rains in Brazil, floods in Australia, Pakistan, and China, poor
weather in Russia. Management indicated potential 24.5 mn MT of sugar
production in SS 2010-11. Improved power situation in Tamil Nadu, slightly lower
pricing for alternate crops may also support sugar prices at current levels.
Valuation: Maintain Buy on SOTP discount and PT of Rs 338
We maintain estimates, our Buy rating and SOTP price target of Rs338, which
includes Rs226 for its stake in CIL at 40% holding discount to our fair value.
EID Parry (India)
Established in 1788, EID Parry became a part of the Murugappa Group in 1981.
It has a diversified agribusiness and also a presence in the sugar, power
cogeneration and distillery industries. It has exposure to the chemical and
fertilizer sector through its 62.94% stake in Coromandel International and to the
sugar refining industry via its joint venture with Cargill. The company plans to
continue to invest in the emerging and fast-growing bio-product and
nutraceutical sectors.
Statement of Risk
The key risks facing the company are sugar sector volatility, weather outlook
and changes in government policy. Additional risks include international trade
barriers and competition.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
EID Parry (India)
Adverse weather dampen results
Loss of Rs372m on limited crushing due to extended monsoons
EID Parry (EID) reported a loss of Rs372m in Q3 FY11, against a profit of
Rs341m in Q3 FY10. This was on extended monsoon, and crushing for less than
10 days in quarter. EID reported a loss of Rs817m in 9M FY11, as compared to
Rs1.0bn profit in 9M FY10. Refining JV was also not profitable, as production
started in Sept 10, and efficiency/operations will scale up gradually. Q3 is
seasonally weak and Q4 is the big quarter.
Limited sugar production in quarter; average realisation at ~Rs27/kg
Cane crushed and sugar produced in EID was 0.08 m MT and 7,060 MT,
respectively in Q3 FY11. Consolidated cane crushed and sugar production was
0.61 mn MT and ~58kMT in Q3 FY11, and 2.02 mn MT and 0.2 mn MT,
respectively in 9M FY11. Average cane pricing for sugar season (SS) 2010-11 is
likely at about Rs1,920/MT.
Global sugar market tight on bad weather; domestic prod. at 24.5 mn MT
EID management highlighted the tight global sugar market on drought and
subsequent winds/rains in Brazil, floods in Australia, Pakistan, and China, poor
weather in Russia. Management indicated potential 24.5 mn MT of sugar
production in SS 2010-11. Improved power situation in Tamil Nadu, slightly lower
pricing for alternate crops may also support sugar prices at current levels.
Valuation: Maintain Buy on SOTP discount and PT of Rs 338
We maintain estimates, our Buy rating and SOTP price target of Rs338, which
includes Rs226 for its stake in CIL at 40% holding discount to our fair value.
EID Parry (India)
Established in 1788, EID Parry became a part of the Murugappa Group in 1981.
It has a diversified agribusiness and also a presence in the sugar, power
cogeneration and distillery industries. It has exposure to the chemical and
fertilizer sector through its 62.94% stake in Coromandel International and to the
sugar refining industry via its joint venture with Cargill. The company plans to
continue to invest in the emerging and fast-growing bio-product and
nutraceutical sectors.
Statement of Risk
The key risks facing the company are sugar sector volatility, weather outlook
and changes in government policy. Additional risks include international trade
barriers and competition.
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