- 04 May 2022
- ICICIdirect Research
Dwarikesh Sugar posts Q4FY22 numbers
DWARKESH - 72 Change: -2.34 (-3.15 %)News: Dwarikesh Sugar reported revenue decline of 20.8% to Rs 475 crore, mainly on account of differential timing in sugar exports. Sugar prices were prevailing at ~Rs 33.9/kg in Q4FY22 compared to ~Rs 31.5 /kg in the corresponding period. Operating profit increased 24.3% to Rs102.4 crore, mainly on account of higher distillery volumes & increase in ethanol realisation given the company is entirely selling B-heavy ethanol. Moreover, ethanol prices were revised upwards from December 2021 onwards. With inventory reduction due to higher exports in last the one year and increasing sugarcane diversion towards ethanol, the company witnessed significant reduction in debt and, in turn, 45% dip in interest cost. Consequently, net profit witnessed growth of 23.6% to Rs 59.6 crore.
Views: Dwarikesh witnessed strong profit growth in Q4FY22 and FY22 given the company is continuously increasing its diversion toward ethanol, which is fetching better profitability for the company. Further, it would be commissioning 170 KLD distillery by July 2022, which would take its total distillery capacity to 11 crore litre per annum in FY24 from current ~5.5 crore litre per annum. This would give it further leeway to reduce sugar production and increase ethanol production in future. The company is one of the most efficient sugar companies in UP with highest recovery rate & abundance availability of sugarcane. Despite most UP millers witnessing lower sugar recovery in the current season and stagnant availability of sugarcane, the change in sugarcane variety would improve yields and recovery in future. We remain positive on the sugar industry and the company.
Impact: Positive