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L o w e r v o l u m e s d r a g t o p l i n e …
Dhampur Sugar Mills’ Q1FY12 results were below our expectations. Net
sales during the quarter witnessed de-growth of 46.6% to | 239.9 crore
from | 448.9 crore in Q3FY11 (I-direct estimate: | 354.9 crore). This was
on the back of lower sales volumes and flat realisation from sugar and
considerably lower revenues from co-generation. However, lower cost of
raw materials (raw material to sales ratio stood at 83.9% over 91.7% in
Q3FY11) helped in protecting margins of Dhampur. Hence, it reported an
EBITDA of | 41 crore (EBITDA margin at 17.1%) against an EBITDA loss of
| 15.8 crore in Q3FY11. Led by higher margins, the company’s earnings
improved to | 0.9 crore against a loss of | 41.2 crore in Q3FY11.
Operational details
During the quarter, Dhampur sold 0.64 lakh tonnes (lt) of sugar at an
average realisation of | 28.7/kg compared to sales of 1.22 lt at | 28.6/kg.
Thus, the significant drop in sales quantity pulled down the segment
revenue ~45% to | 205.4 crore. Revenues from distillery and cogeneration were also lower ~30% and ~71% to | 24.2 crore and | 31.4
crore, respectively. Lower revenues from by-product sales were also led
by lower volume sales with realisations being constant.
Currently, the company is holding 1.62 lt of sugar inventory at an average
cost of | 24.5/kg (combined for free sale and levy quota). Also, higher
requirement of working capital during the quarter increased its interest
cost from | 24.6 crore to | 28.5 crore.
Valuation
At the CMP of | 53, the stock is trading at 5.9x and 4.2x its FY12 and FY13
estimated EPS of | 6.5 and | 10.1, respectively. We expect high festive
demand for sugar in August-December, 2011, to result in firming up of
sugar prices above | 30/kg, thereby improving margins for the company.
At the current price, we believe valuations are at the bottom and change
in the sugar cycle in FY13-14 makes it an attractive BUY. Hence, we have
remained positive on the stock with a target price of | 75 per share
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r v o l u m e s d r a g t o p l i n e …
Dhampur Sugar Mills’ Q1FY12 results were below our expectations. Net
sales during the quarter witnessed de-growth of 46.6% to | 239.9 crore
from | 448.9 crore in Q3FY11 (I-direct estimate: | 354.9 crore). This was
on the back of lower sales volumes and flat realisation from sugar and
considerably lower revenues from co-generation. However, lower cost of
raw materials (raw material to sales ratio stood at 83.9% over 91.7% in
Q3FY11) helped in protecting margins of Dhampur. Hence, it reported an
EBITDA of | 41 crore (EBITDA margin at 17.1%) against an EBITDA loss of
| 15.8 crore in Q3FY11. Led by higher margins, the company’s earnings
improved to | 0.9 crore against a loss of | 41.2 crore in Q3FY11.
Operational details
During the quarter, Dhampur sold 0.64 lakh tonnes (lt) of sugar at an
average realisation of | 28.7/kg compared to sales of 1.22 lt at | 28.6/kg.
Thus, the significant drop in sales quantity pulled down the segment
revenue ~45% to | 205.4 crore. Revenues from distillery and cogeneration were also lower ~30% and ~71% to | 24.2 crore and | 31.4
crore, respectively. Lower revenues from by-product sales were also led
by lower volume sales with realisations being constant.
Currently, the company is holding 1.62 lt of sugar inventory at an average
cost of | 24.5/kg (combined for free sale and levy quota). Also, higher
requirement of working capital during the quarter increased its interest
cost from | 24.6 crore to | 28.5 crore.
Valuation
At the CMP of | 53, the stock is trading at 5.9x and 4.2x its FY12 and FY13
estimated EPS of | 6.5 and | 10.1, respectively. We expect high festive
demand for sugar in August-December, 2011, to result in firming up of
sugar prices above | 30/kg, thereby improving margins for the company.
At the current price, we believe valuations are at the bottom and change
in the sugar cycle in FY13-14 makes it an attractive BUY. Hence, we have
remained positive on the stock with a target price of | 75 per share
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