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  • 01 Aug 2022
  • ICICIdirect Research

DALMIA BHARAT SUGAR REPORTS Q1FY23 NUMBERS

DALMIASUG - 359 Change: -10.80 (-2.92 %)

News: Consolidated revenue witnessed growth of 14.6% to Rs 938.4 crore led by 138.9% growth in distillery sales & 7% growth in sugar sales. Sugar volume declined by 14% to 1.68 lakh tonnes mainly on account of lower exports during the quarter. The company exported majority of sugar for the season in base quarter (Q1FY22) whereas exports during the current season were spread throughout the year (October-September). Operating profit declined 28.9% to Rs101.5 crore mainly on account of increase in sugarcane cost in 2021-22 season, lower sugar recovery in UP, reduction in power tariffs in Maharashtra & losses in consumer business. Net profit declined 60.4% to Rs 49 crore on account of lower operating profit & tax reversal of Rs29.6 crore in base quarter.

Views: Dalmia Bharat is one of the most efficient sugar companies with high distillery capacity compared to crushing operations. This gives a leeway to divert more sugarcane towards ethanol given sugar prices are unlikely to witness runaway surge in future. The company is also setting up 100 KLD grain based distillery to utilise high availability of broken rice / other grains in its catchment area in UP. With mere Rs 403 crore debt & zero net working capital debt, DBS has one of the strongest balance sheet in sugar industry. We believe the company would be able to generate ~40% of its revenue from distillery segment in FY24 after the completion of its capex. Further, the company has the capacity to exports 2.25 lakh tonnes of high grade refined sugar, which is likely to improves its sugar realisation going forward. Foray & early exit in some of the categories in consumer business is disappointing. However, we remain positive on sugar industry as well as DBS.

Impact: Positive.