Balrampur Chini Mills - Company Update - ICICI Securities

Balrampur Chini (BCML) is likely to witness one of the best years in terms of profitability, cash flow generation and total debt reduction. With 2.8 lakh tonnes (lt) of export in sugar season 2019-20 and 0.51 lt of sugar sacrifice for B heavy ethanol, sugar inventories are likely to come down to 2.43 lt at the end of September 2020 against 4.92 lt in September 2019. The huge liquidation of inventory would result in working capital debt coming down to less than Rs. 100 crore by September 2020 against Rs. 1173 crore in September 2019. At the start of sugar season 2020-21, the company would be holding one month of sugar inventory against industry average of 3.5 months. This would significantly strengthen the balance sheet.

Valuation & Outlook

BCML is the most efficient sugar company with sustainable earnings & strong cash flow generation. It has been giving ~40% payout through dividends and buybacks. With the significant increase in cash flow generation, we expect the payout to increase to 60% in FY22E, which would be ~10% payout yield at current price. We value the stock at 1.6x FY21E P/BV with a revised target price of Rs. 210/share. We maintain our BUY rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BalrampurChini_CoUpdate Sep20.pdf

Shares of BALRAMPUR CHINI MILLS LTD. was last trading in BSE at Rs.147 as compared to the previous close of Rs. 151.9. The total number of shares traded during the day was 34409 in over 806 trades.

The stock hit an intraday high of Rs. 154.55 and intraday low of 147. The net turnover during the day was Rs. 5209661.

Source : Equity Bulls

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