Magnified sweetness! This multibagger sugar stock has soared more than 240% in one year

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Shares of Dwarikesh Sugar Industries Limited (DSL) have generated multibagger returns for its shareholders over the past 12 months. The stock rose 4% to hit an intraday high of Rs 95.35 on the Bombay Stock Exchange (BSE) on Wednesday.

Over the past year, the share price has risen from Rs 27.5 to Rs 95.35, recording a return of around 247% over this period. An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 17.36 lakh today.

Long-term investors have made big gains investing in this stock, as it has jumped more than 2,100% over the past ten years. With a market capitalization of over Rs 1,760 crore, the shares are above the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

Sugar stocks are in focus after Finance Minister Nirmala Sitharaman levied additional excise duties on fuel sold without blending it with ethanol or biodiesel.

“Fuel blending is a priority of this government. To encourage fuel blending efforts, unblended fuel will be subject to an additional differential excise duty of Rs 2 per liter from 1 October 2022” , Sitharaman said in his budget speech in the Lok Sabha yesterday.

Ethanol is a by-product of sugar manufacturing. Brokerage ICICI Direct said it would encourage ethanol blending and be positive for sugar companies.

He added that the company is the second largest and one of the most efficient sugar companies in India. In addition to sugarcane juice, B-heavy, it also uses grain-based ethanol to capitalize on the ethanol opportunity in India.

“We expect a 3X increase in distillery volumes to drive earnings at a CAGR of 40.4% in FY21-24E. With increasing profitability and reduced sugar inventory, the company would be able to generate cumulative free cash flow of Rs 517 crore over the next three months This would completely deleverage the balance sheet We value the stock at Rs 135, valuing the business at 3x FY23 BV,” the house added. brokerage.

The company recorded an increase of more than 286% in its autonomous profit to Rs 28.8 crore for the quarter ended December 2021. Earnings for the previous year stood at Rs 7.4 crore. Operating revenue rose to Rs 601 crore in the same quarter from Rs 381 crore a year ago.

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