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R e p a y m e n t o f s u g a r c a n e d u e s h i t s e a r n i n g s …
Balrampur Chini posted dismal Q3FY12 results as it reported a net loss of
| 64 crore on the back of provisioning for the one-time payment of
sugarcane due of the sugar season 2007-08. Net sales grew by 22.9% to
| 662.1 crore led by higher sugar sales and improved realisations of the
distillery segment. At the EBITDA level, the company reported a loss of
| 11.3 crore due to higher raw material cost of sugarcane in the current
season and higher provisioning of previous year’s sugarcane prices. Net
losses can be attributed to erosion of earnings at the EBITDA level and
increasing interest expenses.
Operational performance
Sugar sales volumes increased to 1.96 lakh tonnes with average
realisations of | 29.7/kg compared to 1.48 lakh tonnes with average
realisations of | 28.7/kg in the corresponding quarter. Co-generation sales
improved to | 82.9 crore compared to | 17.5 crore in the corresponding
quarter on the back of higher volumes of 12.8 crore units with tariff of |
4.1/unit compared to 10.4 crore units with average tariff of | 4/unit. In the
distillery segment, sales improved from | 13.6 crore to | 23.6 crore on the
back of higher realisations of | 33.9/litre led by higher RS and ENA prices.
Industry outlook
We remain cautious on the outlook of UP sugar mills due to bleeding
sugar earnings. However, any decision on decontrol, increase in sugar
exports or favourable court decision on sugarcane prices would result in
a positive impact on the earnings of the company.
V a l u a t i o n
At the CMP, the stock is trading at 7.7x its FY13E EPS of | 5.9. We believe
that FY12 would be the last year of the negative cycle and a decline in
cultivation and production would result in sugar prices firming up in 2013
sugar season. However, we still remain cautious as government policy on
the sugar sector remains unpredictable. Hence, we maintain our target
price of | 49/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
R e p a y m e n t o f s u g a r c a n e d u e s h i t s e a r n i n g s …
Balrampur Chini posted dismal Q3FY12 results as it reported a net loss of
| 64 crore on the back of provisioning for the one-time payment of
sugarcane due of the sugar season 2007-08. Net sales grew by 22.9% to
| 662.1 crore led by higher sugar sales and improved realisations of the
distillery segment. At the EBITDA level, the company reported a loss of
| 11.3 crore due to higher raw material cost of sugarcane in the current
season and higher provisioning of previous year’s sugarcane prices. Net
losses can be attributed to erosion of earnings at the EBITDA level and
increasing interest expenses.
Operational performance
Sugar sales volumes increased to 1.96 lakh tonnes with average
realisations of | 29.7/kg compared to 1.48 lakh tonnes with average
realisations of | 28.7/kg in the corresponding quarter. Co-generation sales
improved to | 82.9 crore compared to | 17.5 crore in the corresponding
quarter on the back of higher volumes of 12.8 crore units with tariff of |
4.1/unit compared to 10.4 crore units with average tariff of | 4/unit. In the
distillery segment, sales improved from | 13.6 crore to | 23.6 crore on the
back of higher realisations of | 33.9/litre led by higher RS and ENA prices.
Industry outlook
We remain cautious on the outlook of UP sugar mills due to bleeding
sugar earnings. However, any decision on decontrol, increase in sugar
exports or favourable court decision on sugarcane prices would result in
a positive impact on the earnings of the company.
V a l u a t i o n
At the CMP, the stock is trading at 7.7x its FY13E EPS of | 5.9. We believe
that FY12 would be the last year of the negative cycle and a decline in
cultivation and production would result in sugar prices firming up in 2013
sugar season. However, we still remain cautious as government policy on
the sugar sector remains unpredictable. Hence, we maintain our target
price of | 49/share.
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