Dhampur Sugar - Q2FY21 Result Update - ICICI Direct

Dhampur Sugar (DSL) posted healthy Q2FY21 numbers with 34.3% growth in revenue led by 48.7% growth in sugar segment sales & 43.6% growth in distillery segment sales. DSL did not sell any power in off-season. Strong sugar segment sales were led by higher domestic sale quota whereas distillery sales was supported by 22.8% volume increase & 24% rise in ethanol realisation. The company ramped up new distillery capacity utilisation with increase in availability of molasses. Also, increase in ethanol prices & higher proportional of B heavy ethanol led to the strong realisation growth. DSL sold 2.17 lakh tonnes (lt) of sugar at Rs. 33.3/kg, 2.9 crore litre of ethanol at Rs. 50.5/litre during the quarter. Operating profit rose 113.1% to Rs. 72.1 crore led by strong growth in revenues & substantial reduction in inventory. PAT grew from Rs. 3.5 crore to Rs. 27.8 crore in Q2FY21E. Sugar inventory reduced by 0.92 lt in last one year to 1.98 lt valued at Rs. 29.3/kg.

Valuation & Outlook

With the process of diversion of sugarcane for ethanol production, DSL would keep its sugar inventory low despite higher sugar production. This would help the company continue to de-leverage its balance sheet. We expect the company to keep dividend payout at ~30%. The stock is trading at extremely attractive multiples of 3.7x & 3.3x its FY21E & FY22E earnings respectively. We maintain our BUY rating on the stock with the revised target price of Rs. 175/share.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Dhampur_Q2FY21.pdf

Shares of DHAMPUR SUGAR MILLS LTD. was last trading in BSE at Rs.139.85 as compared to the previous close of Rs. 140.35. The total number of shares traded during the day was 5631 in over 157 trades.

The stock hit an intraday high of Rs. 142.25 and intraday low of 139.2. The net turnover during the day was Rs. 791018.

Source : Equity Bulls

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