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Balrampur Chini sees earnings growth, benefits from higher realisations…

News: Balrampur Chini reported decent numbers with 6.3% growth in earnings. Consolidated revenues de-grew 5.9% with marginal dip in sugar & distillery sales. Sugar sales were down 4% mainly due to lower domestic sales quota. Domestic sugar sale quota was 2.7 lakh tonnes (13% lower) as against 3.1 lakh tonnes in corresponding quarter. However, sugar prices rose from august 2021, resulting in higher realisation (Estimated Avg. Realisation | 34.5 / kg). Distillery segment sales were also down 3.7%. Operating profit grew 5.6% with higher sugar realisation & higher inventory valuation. Interest cost reduced from Rs.9 crore to Rs.6.2 crore in Q2FY22 YoY. Net profit witnessed the growth of 6.3% to Rs.83.3 crore. Total debt came down by Rs. 930 crore to Rs.305 crore with inventory liquidation.

Views: Sugar industry has benefited from aggressive exports & diversion of sugarcane towards ethanol in last three years, resulting in industry wide sugar inventories coming down from 14.5 million to 8.2 million tonnes & increasing domestic sugar prices. Current sugar prices are around ~ Rs.37 / kg (up from Rs.32.5 in June 2021). Balrampur has been impacted by decline in sugarcane production in its catchment area, which has increased its cost of production. We expect company to see recovery in sugarcane availability in its catchment area with change in sugarcane variety. It continues to remain industry best with strong balance sheet & higher shareholders payout (dividend & buybacks). With increase ethanol capacities & stable sugar prices, we remain positive on the industry & the company over long run.