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http://content.icicidirect.com/mailimages/ICICIdirect_ShreeRenukaSugar_Q5SY12.pdf
H i g h e r d e b t r e m a i n s a b i g c o n c e r n …
Shree Renuka Sugars posted a second consecutive quarter of dismal
results with the company posting a loss of | 85 crore (adjusted exceptional
items). Net sales witnessed de-growth of 17.7% on the back of domestic
volumes declining due to lower refinery sales. However, EBITDA margins
improved to 16.2% compared to 12% in Q1FY12 and 10.5% in Q4FY12.
The margins expanded due to improved margins in both Indian and
Brazilian operations. Interest cost increased by 46.8% due to higher
interest rates and rising debt levels for the working capital requirement in
India. Depreciation provisioning also increased after the completion of
25,000 hectare of sugarcane plantation in Brazil. There was an exceptional
profit to the tune of | 429 crore with respect to the reversal of exchange
loss primarily incurred in the quarter ended September 2011. Adjusting the
exceptional gain, the company posted a loss of | 85 crore as compared to
the profit of | 128.1 crore in Q1FY12.
ƒ Standalone performance
SRSL’s net sales for the quarter witnessed a significant decline of 36.5%
to | 712.2 crore as compared to | 1121.3 crore in Q1FY12 on the back of a
decline in sugar sales volumes due to lower production through refinery.
Sugar sales dipped from | 836.8 crore to | 451.7 crore. However, EBITDA
margins improved from 8.7% to 14.8% due to lower cost of sugarcane in
Maharashtra. The company is paying ~| 240/quintal, which is ~25%
lower than UP-based sugar millers as the average recovery through
sugarcane in Maharashtra is ~11.5%.
V a l u a t i o n
Despite a better operational performance compared to Q4FY12, the
company is making losses at the consolidate level. Consolidated debt for
the company is at | 9300 crore and still increasing QoQ. We believe high
debt levels continue to remain an overhang on the stock. The company
needs to de-leverage its balance sheet for higher earnings growth in
future. Hence, we remain cautious on the stock and maintain a HOLD
rating with a target of | 38/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_ShreeRenukaSugar_Q5SY12.pdf
H i g h e r d e b t r e m a i n s a b i g c o n c e r n …
Shree Renuka Sugars posted a second consecutive quarter of dismal
results with the company posting a loss of | 85 crore (adjusted exceptional
items). Net sales witnessed de-growth of 17.7% on the back of domestic
volumes declining due to lower refinery sales. However, EBITDA margins
improved to 16.2% compared to 12% in Q1FY12 and 10.5% in Q4FY12.
The margins expanded due to improved margins in both Indian and
Brazilian operations. Interest cost increased by 46.8% due to higher
interest rates and rising debt levels for the working capital requirement in
India. Depreciation provisioning also increased after the completion of
25,000 hectare of sugarcane plantation in Brazil. There was an exceptional
profit to the tune of | 429 crore with respect to the reversal of exchange
loss primarily incurred in the quarter ended September 2011. Adjusting the
exceptional gain, the company posted a loss of | 85 crore as compared to
the profit of | 128.1 crore in Q1FY12.
ƒ Standalone performance
SRSL’s net sales for the quarter witnessed a significant decline of 36.5%
to | 712.2 crore as compared to | 1121.3 crore in Q1FY12 on the back of a
decline in sugar sales volumes due to lower production through refinery.
Sugar sales dipped from | 836.8 crore to | 451.7 crore. However, EBITDA
margins improved from 8.7% to 14.8% due to lower cost of sugarcane in
Maharashtra. The company is paying ~| 240/quintal, which is ~25%
lower than UP-based sugar millers as the average recovery through
sugarcane in Maharashtra is ~11.5%.
V a l u a t i o n
Despite a better operational performance compared to Q4FY12, the
company is making losses at the consolidate level. Consolidated debt for
the company is at | 9300 crore and still increasing QoQ. We believe high
debt levels continue to remain an overhang on the stock. The company
needs to de-leverage its balance sheet for higher earnings growth in
future. Hence, we remain cautious on the stock and maintain a HOLD
rating with a target of | 38/share.
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