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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf
Sugar
ƒ Domestic sugar production to be lower in coming season (SY13)
India’s sugar production in SY12, up to March 31, has been 23.2 million
tonnes (MT) (higher by ~13% against corresponding period last year).
Output in Maharashtra was up 11.1% to 8.1 MT while production in
Uttar Pradesh stood at 6.6 MT, up 12.7%. India’s total production for
SY12 is expected to be ~26 MT against 24.2 MT in SY11. Despite 3 MT
of exports allowance the year, inventory levels have remained high at
~6.8 MT. High production, increasing inventory levels and stable
consumption have resulted in subdued sugar prices at ~28-29/kg. With
the glut in the system, sugarcane arrears have increased drastically to
~| 9,900 crore by March 2012. We believe rising arrears would result in
a decline in area under cane acreage in SY13. Going ahead, with a fall in
production, we believe sugar prices would improve to ~| 32/kg in SY13.
ƒ Global surplus to shrink
With the expected fall in Indian production and flat output in South
Central Brazil (31.2 MT in SY12) next year, world sugar surplus is
expected to shrink to ~5 MT from ~10 MT in 2011-12. We believe
global sugar prices would remain firm at 24-25 cents/lb and any dip in
production in other exporting countries (Thailand and Australia) could
lead to even higher global prices, going forward.
Company specific view for Q4FY12E
Company Remarks
Balrampur Chini Higher sales to be led by higher volumes of sugar, distillery & co-gen. We expect
sales of 1.5 lakh tonnes (lt) of sugar at realisation of |28/kg. Ethanol sales (24000
kl) to be at slightly higher price of 27.5/litre. Co-gen sales are expected at ~| 24
crore units at | 4.1/unit (~| 22 crore at | 4/unit in Q4FY11)
Bajaj Hindustan We expect sales volume of 3.2 lt of sugar at a realisation of |28.8/kg. Higher cane
availability and crushing would lead to higher by-products sales. We expect
increased distillery sales of 33,750 kl with realisations at ~| 27/l. Power unit sales
are expected to be 1.62 crore units with realisations improving to | 4.5/unit
Dhampur Sugar We expect sales of 1.1 lt of sugar with average realisation of | 28.8/kg. The
company' distillery and co-gen volume & realisations during the quarter are
expected to be higher at 13500 kl at | 27.5/l (| 25/l in Q4FY12) and ~10 crore
units at |4.6/unit (|4/unit in Q4FY12), respectively
Shree Renuka
Sugars
We expect sales of 2.4 lt of sugar at ~| 29/kg in India. Volumes from VDI & RDB
are estimated at 0.12 lt at 24cents/lb and 0.8 lt at 24.5 cents/lb, respectively.
Higher cane cost of | 240/quintal would pull down margins. Further, burdened with
interest cost, we expect bottomline to report a loss
Source: Company, ICICIdirect.com Research
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