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Sugar
Sugar prices remain at ~| 30 / kg, sugarcane cost likely to go up
Sugar prices during Oct-Dec 2011 quarter has surged as high as | 34 per
kg. However, average prices have remained around | 30 per kg.
Simultaneously, increase in sugarcane cost to | 240 per quintal would
have a negative impact of margins from sugar segment. We believe
government would allow further sugar exports only after UP Elections,
which could push up the domestic sugar prices upward.
Simultaneously, almost 20% rupee depreciation has also resulted in
higher export realisations for Maharashtra based sugar companies.
Global sugar prices to remain between 20-25 cents/ lb
Global sugar prices have come down from 36 cents in Jan-Feb 2011 to
22-23 cents currently. Production loss in Brazil has been set-off by the
excess supplies from Russia, India and Thailand. For the companies with
the Brazilian operations, dip in volumes would affect the topline growth.
However, 20% currency depreciation would result in higher export
realisations from Brazil.
Domestic sugar production could cross 26 million tonnes
Sugar production in the current 2011-12 season could increase above
26 million tonnes, which would coerce government to increase the
exports quantities. We believe higher production would result in
depressed earnings for the millers and would further result in decline in
area under sugarcane cultivation in March 2012. We believe in the next
sugar season (October2011-September 2012) sugar production would
witness a considerable decline.
Company Specific View (Q3FY12E)
Company Remarks
Balrampur Chini The company is expected to sell 1.6 lakh tonnes of sugar with the average
realisaiton of | 30 per kg. In power segment, it is expected to sell 15.12 crore of
units with the average tariff of |4.5 per unit. It is paying | 240 per quintal to
farmaers for sugarcane untill Allahabad court gives its decision of SAP.
Bajaj Hindustan we expect the company to sell 3.2 lakh tonnes of sugar with the average realisations
of | 30 per kg. with the increase in baggase avaliabiity power volumes to would
shoot up in Q1SY12 . However, increase in sugarcane prices would continue to
haunt margins and bottomline.
Dhampur Sugar We expect the company to sell 1.2 lakh tonnes of sugar with the avergae realisation
of | 29.7 per kg. The company would be selling 2.4 crore units with the avergae tariff
of | 4.7 per unit. Due to higher sugarcane cost, earning would remain muted.
Shree Renuka
Sugars
The company is expected to sell 2.8 lakh tonnes of sugar with the average
realisaiton of | 28.5 per kg.In Brazilian operations, sugar sales to remain muted due
to lower prodcution after the extreme weather conditions in Sep quarter. However,
export realisaitons would be high after ~20% depreciation of Real.
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sugar
Sugar prices remain at ~| 30 / kg, sugarcane cost likely to go up
Sugar prices during Oct-Dec 2011 quarter has surged as high as | 34 per
kg. However, average prices have remained around | 30 per kg.
Simultaneously, increase in sugarcane cost to | 240 per quintal would
have a negative impact of margins from sugar segment. We believe
government would allow further sugar exports only after UP Elections,
which could push up the domestic sugar prices upward.
Simultaneously, almost 20% rupee depreciation has also resulted in
higher export realisations for Maharashtra based sugar companies.
Global sugar prices to remain between 20-25 cents/ lb
Global sugar prices have come down from 36 cents in Jan-Feb 2011 to
22-23 cents currently. Production loss in Brazil has been set-off by the
excess supplies from Russia, India and Thailand. For the companies with
the Brazilian operations, dip in volumes would affect the topline growth.
However, 20% currency depreciation would result in higher export
realisations from Brazil.
Domestic sugar production could cross 26 million tonnes
Sugar production in the current 2011-12 season could increase above
26 million tonnes, which would coerce government to increase the
exports quantities. We believe higher production would result in
depressed earnings for the millers and would further result in decline in
area under sugarcane cultivation in March 2012. We believe in the next
sugar season (October2011-September 2012) sugar production would
witness a considerable decline.
Company Specific View (Q3FY12E)
Company Remarks
Balrampur Chini The company is expected to sell 1.6 lakh tonnes of sugar with the average
realisaiton of | 30 per kg. In power segment, it is expected to sell 15.12 crore of
units with the average tariff of |4.5 per unit. It is paying | 240 per quintal to
farmaers for sugarcane untill Allahabad court gives its decision of SAP.
Bajaj Hindustan we expect the company to sell 3.2 lakh tonnes of sugar with the average realisations
of | 30 per kg. with the increase in baggase avaliabiity power volumes to would
shoot up in Q1SY12 . However, increase in sugarcane prices would continue to
haunt margins and bottomline.
Dhampur Sugar We expect the company to sell 1.2 lakh tonnes of sugar with the avergae realisation
of | 29.7 per kg. The company would be selling 2.4 crore units with the avergae tariff
of | 4.7 per unit. Due to higher sugarcane cost, earning would remain muted.
Shree Renuka
Sugars
The company is expected to sell 2.8 lakh tonnes of sugar with the average
realisaiton of | 28.5 per kg.In Brazilian operations, sugar sales to remain muted due
to lower prodcution after the extreme weather conditions in Sep quarter. However,
export realisaitons would be high after ~20% depreciation of Real.
Source: Company, ICICIdirect.com Research
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