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  • 25 May 2022
  • ICICIdirect Research

DALMIA BHARAT POSTS ITS Q4FY22 NUMBERS

DALBHARAT - 1857 Change: -45.55 (-2.39 %)

News: Dalmia Bharat Sugar reported Q4FY22 results with 75.1% jump in revenues & 9.2% growth in earnings. Consolidate revenue witnessed a growth of 75.1% to Rs 856 crore on account of 111.2% growth in sugar sales, 125% jump in distillery sales & 28.9% growth in power revenues. The company witnessed 56% growth in sugar volumes to 1.5 lakh tonnes. We believe the company has aggressively exported large quantity of sugar during the quarter. Distillery volumes more than doubled to 4.1 crore liters after company expanded its distillery capacity to 600 KLPD. We believe the slower growth in operating profit is mainly due to increase in sugarcane prices in current season in UP and lower recovery rate. We also believe the company is holding high inventory of B-heavy molasses given very aggressive sugarcane diversion towards ethanol during the quarter. Given, distillery margins are much higher than sugar, high inventory of B-heavy molasses would result in higher ethanol volumes & profitability in next two quarter.

Views: Dalmia Bharat sugar is one of the most aggressive in expanding distillery capacity in last few years. In next one year, the company would expand its distillery capacity to 750 KLD (25 crore liters). Given high sugar production on a continuous basis, the company would be able to reduce its dependence of sugar considerably. Further, the company generally export certain quantity of high quality refined sugar every year, which fetches high sugar realisation. The company is also aggressively in establishing its Consumer business by launching new products every quarter. We believe successful venture into consumer brands in foods category can drive growth for the company in the longer run. We remain positive on sugar industry in general & Dalmia Bharat sugar particular.

Impact: Positive