Balrampur Chini Mills (Buy, Target Rs.85)
Balrampur Chini Mills Ltd – BCML is one of the largest integrated sugar producer in India with a crushing capacity of 76500 TCD spread across 10 units in UP, 320klpd distillery and 126mw of saleable power to the state grid.
BCML is presently carrying one of the highest sugar inventory among its peers at 2.25lac tons valued at under Rs29 per kg as it has one of the most healthy balance sheets in the sector with long-term debt of only Rs6bn half of which would be repaid during the next one year.
BCML in our view is slated to record its highest volumes ever in co-generation and distillery operations this fiscal and we expect that the second half numbers would reflect higher profitability from the sugar operations as well with realizations hovering around Rs35 per kg presently for the company. We recommend a BUY on BCML at the CMP of Rs65 with a price target of Rs85
TECHNICAL VIEW
Technically, the stock has started an uptrend from the start of this year, as seen from the rising channel. In the process of this rising channel formation, it has also managed to break the downward sloping trendline which is a positive indication for the stock.
The stock is currently trading at the support zone of the channel at around 65 levels. We believe once the consolidation process completes the stock would resume its uptrend and may probably test the high’s of the channel around 85 levels.
Thanks and Regards
LKP Advisory
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