BALRAMPUR CHINI MILLS (Buy, Target Rs.80)
Ø Balrampur Chini Mills Ltd-BCML is one of the largest integrated sugar producer in India with a crushing capacity of 76500 tcd spread across ten units in UP, 320klpd distillery capacity across its three units and 125mw of saleable power capacity.
Ø With domestic sugar prices beginning to look up since July we believe that continuation of these early signals could make core sugar operations profitable for BCML which could end the current fiscal with profits of Rs1.3bn and next fiscal with profits of Rs2bn ( BCML paid cane arrears of Rs0.92bn last fiscal pertaining to season 2007-08 and our estimates are without taking any arrears into account)
Ø BCML trading at 7xFY'13-14E earnings at a price to book of 1.3x looks an attractive bet at current levels for a one year price target of Rs80. Buy
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TECHNICAL VIEW
Ø Technically the stock has come out of its long term down trend. With a minor resistance at 60 levels, the stock chart is one of the strongest in its sector.
Ø The stock is also trading above its 200 DMA, which is again a positive sign for the long term trend.
Ø Also, the long term retracement levels indicate the next significant resistance at 84 levels, with critical support at its previous low of 35 levels.
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