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L o w e r r e a l i s a t i o n s h a m m e r m a r g i n s …
Balrampur Chini Mills Ltd (BCML) reported its Q1FY12 results. Net sales
witnessed a QoQ growth of 20.4% to | 563.7 crore from | 538.8 crore in
Q6FY11 on the back of higher sugar sales volumes. However, sugar
realisations were lower QoQ by ~| 1/kg at | 27.2/kg. This was due to the
decline in sugar prices as the expected sugar production of the country in
SY12 is 26 million tones (MT) from 24.2 MT in SY11. Lower realisations
hit the margins considerably, pulling it down to 7.9% in Q1FY12 from
12% in Q3FY11 and 44% in Q6FY11. The company is carrying 3.44 lakh
tonnes (LT) of sugar inventory at a cost of | 26.5/kg. Interest cost
increased by 53.1% due to higher working capital requirement. The
company reported a loss of | 19.9 crore due to lower sugar and ethanol
realisations and high inventory cost of sugar.
Operational highlights
During the quarter, BCML sold 1.67 LT of sugar, compared to 1.15 LT in
Q6FY11 and 1.65 LT in Q3FY11, at an average realisation of | 27.2/kg.
Distillery sales in Q1FY12 were 20,784 kilolitre (kl) compared to 18,942 kl
in Q6FY11 and 13,364 kl in Q3FY11. Blended realisations dipped to |
23.8/litre in Q1FY12 from | 27/litre in Q6FY11. This was due to lower
realisation from rectified spirit and extra neutral alcohol. Co-generation
volume also dipped from 21.8 crore units in Q6FY11 and 9.2 crore units in
Q3FY11 to 14.7 crore units in Q1FY12. However, power realisations were
higher on a QoQ basis at | 4.13/unit but lower on a YoY basis.
Valuation
At the CMP, the stock is trading at 8.6x its FY12E EPS of | 8.9 and 6.6x its
FY13E EPS of | 9.4. The stock is trading at ~25% discount to its
replacement cost of | 80/share. With the government allowing sugar
exports of 1.0 MT under OGL, domestic sugar prices have moved up from
~| 27/kg in April-May, 2011 to ~| 29/kg currently. Going ahead, with the
lighter balance sheet on repayment of debt & improvement in domestic &
international sugar prices, we expect margins to improve. Hence, we
continue to stay positive on BCML and maintain our target price of | 81.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r r e a l i s a t i o n s h a m m e r m a r g i n s …
Balrampur Chini Mills Ltd (BCML) reported its Q1FY12 results. Net sales
witnessed a QoQ growth of 20.4% to | 563.7 crore from | 538.8 crore in
Q6FY11 on the back of higher sugar sales volumes. However, sugar
realisations were lower QoQ by ~| 1/kg at | 27.2/kg. This was due to the
decline in sugar prices as the expected sugar production of the country in
SY12 is 26 million tones (MT) from 24.2 MT in SY11. Lower realisations
hit the margins considerably, pulling it down to 7.9% in Q1FY12 from
12% in Q3FY11 and 44% in Q6FY11. The company is carrying 3.44 lakh
tonnes (LT) of sugar inventory at a cost of | 26.5/kg. Interest cost
increased by 53.1% due to higher working capital requirement. The
company reported a loss of | 19.9 crore due to lower sugar and ethanol
realisations and high inventory cost of sugar.
Operational highlights
During the quarter, BCML sold 1.67 LT of sugar, compared to 1.15 LT in
Q6FY11 and 1.65 LT in Q3FY11, at an average realisation of | 27.2/kg.
Distillery sales in Q1FY12 were 20,784 kilolitre (kl) compared to 18,942 kl
in Q6FY11 and 13,364 kl in Q3FY11. Blended realisations dipped to |
23.8/litre in Q1FY12 from | 27/litre in Q6FY11. This was due to lower
realisation from rectified spirit and extra neutral alcohol. Co-generation
volume also dipped from 21.8 crore units in Q6FY11 and 9.2 crore units in
Q3FY11 to 14.7 crore units in Q1FY12. However, power realisations were
higher on a QoQ basis at | 4.13/unit but lower on a YoY basis.
Valuation
At the CMP, the stock is trading at 8.6x its FY12E EPS of | 8.9 and 6.6x its
FY13E EPS of | 9.4. The stock is trading at ~25% discount to its
replacement cost of | 80/share. With the government allowing sugar
exports of 1.0 MT under OGL, domestic sugar prices have moved up from
~| 27/kg in April-May, 2011 to ~| 29/kg currently. Going ahead, with the
lighter balance sheet on repayment of debt & improvement in domestic &
international sugar prices, we expect margins to improve. Hence, we
continue to stay positive on BCML and maintain our target price of | 81.
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