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India Equity Research Reports, IPO and Stock News
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Shree Renuka Sugars
Strong visibility on Brazil profitability; Brazil to account for more than 60% of
EBITDA; leverage no longer a concern in view of strong FCF visibility.
Brazil sugar realisation hedged at USD0.20/lb through put options; upside largely
uncapped; sugar currently trading at USD0.34-0.22 over the next two years leaving
significant upside potential.
We believe weakness in Indian sugar prices is temporary due to crushing season,
high release, lack of exports and high production estimate; we expect a rise after
March, as some mills stop crushing, sugar production estimates are lowered.
Variable cane price and by-products should aid domestic profitability. Ethanol
already attractive at INR27/litre and potential change in regulation to make it
market linked could increase realisation further.
BUY, TP of INR110 (7x EV/EBITDA), upside from higher EBITDA. Several longterm
growth levers including increasing capacity, own cane and mix in Brazil.
Strong management track record, Revenue, EBITDA, PAT up 10x, 15x, 8x over
FY07-FY10.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Shree Renuka Sugars
Strong visibility on Brazil profitability; Brazil to account for more than 60% of
EBITDA; leverage no longer a concern in view of strong FCF visibility.
Brazil sugar realisation hedged at USD0.20/lb through put options; upside largely
uncapped; sugar currently trading at USD0.34-0.22 over the next two years leaving
significant upside potential.
We believe weakness in Indian sugar prices is temporary due to crushing season,
high release, lack of exports and high production estimate; we expect a rise after
March, as some mills stop crushing, sugar production estimates are lowered.
Variable cane price and by-products should aid domestic profitability. Ethanol
already attractive at INR27/litre and potential change in regulation to make it
market linked could increase realisation further.
BUY, TP of INR110 (7x EV/EBITDA), upside from higher EBITDA. Several longterm
growth levers including increasing capacity, own cane and mix in Brazil.
Strong management track record, Revenue, EBITDA, PAT up 10x, 15x, 8x over
FY07-FY10.
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