Q3FY21 Result Update - Balrampur Chini - ICICI Direct

Balrampur Chini reported disappointing set of numbers with 10.3% decline in sales & 67% dip in earnings. The de-growth in sales & earnings was mainly due to increase in cost of production as like to like recoveries are lower in current season adversely impacted by weather conditions. Further sugarcane yield was also impacted by red rot disease in some parts of UP. Sugar realisation remained flat with delay in announcement of export subsidy & higher domestic sales quota. However, we believe the impact of these factors is temporary for this season and long term story of sugarcane diversion towards ethanol to balance sugar inventories remained unchanged. Sugar volumes have declined 14.5% to 2.7 lakh tonnes (lt) due to absence of exported in Q3. The base quarter includes 0.9 lt of exports. Distillery volumes were up 18.9% to 2.8 crore litre whereas realisation was up 10.4% to Rs. 46/litre. Out of total distillery volumes, 35% was B heavy ethanol. 51% was C heavy ethanol & rest was ENA. Power revenues were up 2.2% with flat volumes. The decline in operating profit led to similar dip in profitability. PAT de-grew 62.9% to Rs. 26.9 crore. Profit from associates increased from Rs. 3.2 crore to Rs. 5.9 crore.

Valuation & Outlook

BCML is the most efficient sugar company with sustainable earnings & strong cash flow generation. It has been giving ~40% payout through dividends, buybacks. The company would continue to generate strong cash-flows. We expect operating cash flow to the tune of Rs. 760 crore & Rs. 920 crore for FY21E & FY22E, respectively. We value stock at 1.3x FY22E P/BV with a revised target price of Rs. 190 (earlier Rs. 210). We maintain our BUY rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BalrampurChini_Q3FY21.pdf

Shares of BALRAMPUR CHINI MILLS LTD. was last trading in BSE at Rs.159.85 as compared to the previous close of Rs. 161.75. The total number of shares traded during the day was 67483 in over 845 trades.

The stock hit an intraday high of Rs. 167.2 and intraday low of 158.35. The net turnover during the day was Rs. 11010853.

Source : Equity Bulls

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