Balrampur Chini Mill Mtd (BCML) Q3FY22 Results According to Brokerage
- BCML released a good set of numbers with sales growth of 13%.
- Sales grew by 13% year-on-year, helped by the realization of sugar and ethanol.
- Earnings before interest, tax, depreciation and amortization (EBITDA) was Rs 99.8 crore, up 174.1% year-on-year, with margins at 8.2%.
- The consequent profit after tax (PAT) was Rs 64.1 crore (up 138.4% year-on-year).
Key investment rationale for Balrampur Chini Mill Mtd (BCML) according to ICICI Securities
- With Distillery Capital Expenditure (CAPEX), BCML would be able to increase its ethanol volumes by 2.2x to 35 crore liter by FY24. Distillery sales will grow at a compound annual growth rate (CAGR) of 33.6% at Rs 1,954.8 crore in FY21-24E, which would account for 33% of total revenue.
- He undertook the modernization and decongestion of certain factories. This would lead to higher sugarcane crushing and better recoveries by FY24. We are forecasting revenue CAGR of 7% in FY21-24E.
- The company is introducing a new variety of sugarcane in its catchment areas, which would reduce dependence on Co-0238.
Buy with a target price of Rs 600
ICICI Securities said in a report that “BCML’s share price has increased by 2.9x over the past five years (from Rs 153 in Feb 2017 to Rs 445 in Feb 2022). We expect an increase of 2 .2x Distillery volumes to grow revenue with a CAGR of 26.6% in FY21-24E We continue to maintain our Buy rating on the stock We value the stock at Rs 600, valuing the company at 18 x PE of the financial year 23. »
With an idea of alternative actions, the brokerage also said, “We also like Dwarikesh Sugar in our sugar coverage. The company is one of the most efficient companies with the highest sugar recovery and availability abundant sugar cane. It increases its distillery capacity to 3x in the next three years. We value the stock at Rs 135/share with a BUY recommendation.”
The security was selected in the brokerage report of ICICI Securities. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article.