BALRAMPUR CHINI POSTS MUTED Q4FY22 NUMBERS

News: Balrampur Chini reported muted set of results with flat operating profit number & mere 2.1% growth in earnings. Consolidated revenue witnessed a growth of 25.5% to Rs 1279.6 crore led by 21.7% growth in sugar segment sales & 45% growth in distillery sales. Sugar volume growth was 26.1% to 2.5 lakh tonnes led by 0.35 lakh tonnes of exports & 2.1 lakh tonnes of domestic sales. Blended sugar realisation was up 7.8% to Rs 34.5 kg. The company is holding 5.2 lakh tonnes of sugar valued at Rs34.22 / kg as against 6.4 lakh tonnes valued at Rs 31.3 / kg. Distillery sales growth of 45% led by 35.4% growth in distillery volumes & 5.4% increase in distillery realisation. The company sold 5.13 crore litres of ethanol + ENA during the quarter, which includes 4.42 crore litres of B-heavy ethanol (86.2%) , 0.28 crore litres of C-heavy ethanol (5.5%) & 0.43 crore litres of ENA (8.3%) for levy  quota. Operating profit was flat at Rs331 crore despite high sugar & distillery sales volumes mainly due to increase in cost of sugar during the quarter on account of increase in sugarcane price during the season and lower recovery rates. Overall costs has increased by Rs3 / kg (Rs2/kg due to increase in sugarcane prices & Rs1/kg due to lower recovery in current season.  Net profit increased by 2.1% Rs240.5 crore.

Views: Balrampur Chini has been adversely impacted by lower sugarcane crushing in last two seasons due to first red rott disease in its catchment area & then unseasonal rains in October 2021. Though sugarcane recovery has been lower for all UP based sugar companies however, sugarcane availability has been particularly impacted for eastern UP based sugar millers. Though, the company has been trying to replace sugarcane variety in its catchment area to lower the dependency on CO-0238 sugarcane variety, it is yet to fetch good results. We believe Balrampur would be able to increase its sugarcane crushing to the previous high in 2022-23 season. We remain positive on the company on a long term perspective however, short term headwinds would continue to impact its performance in near term. The company is on track to commissioned its distillery & complete its capex by November-2022, which would increase its distillery capacity to 35 crore litre.

Impact: Neutral