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S u b d u e d p e r f o r m a n c e …
Balrampur Chini reported bleak Q2FY12 results. Net sales witnessed a
1.1% de-growth at | 502.8 crore as sugar volumes and realisations
remained flat during the quarter on a YoY basis. The company posted
profits at the operating level despite a lag in the sales performance on the
back of higher sales volume from its distillery segment. The EBITDA
margins stood at 3.8% compared to negative margins in Q4FY11. Interest
cost for the company increased from | 23.1 crore in Q4FY11 to | 31.5
crore in Q2FY12. The company, thus, reported a net loss of | 39.4 crore
as against a loss of | 78 .3 crore in Q4FY11.
Operational performance
Sugar sales volumes and realisations remained flat in Q2FY12. BCL sold
1.59 lakh tonnes (lt) of sugar at an average realisation of | 28.2/kg against
1.55 lt at | 27.1/kg in Q4FY11. Distillery sales were relatively higher at
10,178 kilo litre (kl) at an average realisations of | 27.9/litre against 8520 kl
at |24.2/litre in Q4FY11. Power sales were negligible due to nonavailability of bagasse.
Industry outlook
With the UP government announcing a relatively higher cane price of |
240/kg for the current year and sugar prices remaining at around | 29/kg,
we remain cautious on the outlook of UP sugar mills. However, we do
await any positive announcement in the sector such as, further allowance
of exports by the government and revival in domestic sugar prices, which
could help in protecting the margins of companies from eroding further
and improve earnings.
V a l u a t i o n
At the CMP, the stock is trading at 7.6x its FY13E EPS of | 5.9. The stock
is trading at ~45% discount to its replacement cost of | 80/share. We
believe that FY12 would be the last year of the negative cycle for the
sugar industry and a substantial decline in cultivation and production
would result in sugar prices to firm up from here. We do remain cautious
on the sector until the awaited decisions on de-control in the sector is
received. Hence, we are revising our TP from | 80 to | 49/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S u b d u e d p e r f o r m a n c e …
Balrampur Chini reported bleak Q2FY12 results. Net sales witnessed a
1.1% de-growth at | 502.8 crore as sugar volumes and realisations
remained flat during the quarter on a YoY basis. The company posted
profits at the operating level despite a lag in the sales performance on the
back of higher sales volume from its distillery segment. The EBITDA
margins stood at 3.8% compared to negative margins in Q4FY11. Interest
cost for the company increased from | 23.1 crore in Q4FY11 to | 31.5
crore in Q2FY12. The company, thus, reported a net loss of | 39.4 crore
as against a loss of | 78 .3 crore in Q4FY11.
Operational performance
Sugar sales volumes and realisations remained flat in Q2FY12. BCL sold
1.59 lakh tonnes (lt) of sugar at an average realisation of | 28.2/kg against
1.55 lt at | 27.1/kg in Q4FY11. Distillery sales were relatively higher at
10,178 kilo litre (kl) at an average realisations of | 27.9/litre against 8520 kl
at |24.2/litre in Q4FY11. Power sales were negligible due to nonavailability of bagasse.
Industry outlook
With the UP government announcing a relatively higher cane price of |
240/kg for the current year and sugar prices remaining at around | 29/kg,
we remain cautious on the outlook of UP sugar mills. However, we do
await any positive announcement in the sector such as, further allowance
of exports by the government and revival in domestic sugar prices, which
could help in protecting the margins of companies from eroding further
and improve earnings.
V a l u a t i o n
At the CMP, the stock is trading at 7.6x its FY13E EPS of | 5.9. The stock
is trading at ~45% discount to its replacement cost of | 80/share. We
believe that FY12 would be the last year of the negative cycle for the
sugar industry and a substantial decline in cultivation and production
would result in sugar prices to firm up from here. We do remain cautious
on the sector until the awaited decisions on de-control in the sector is
received. Hence, we are revising our TP from | 80 to | 49/share.
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