TRIVENI ENGINEERING POSTS Q1FY23 NUMBERS

News: Triveni Engineering reported sales growth of 18.2% to Rs1225.7 crore led by 17.2% growth in sugar sales, 66.7% growth in distillery sales, 49.2% growth in water segment & 7% growth in gears business. Sugar volumes increased by 11.9% to 2.39 lakh tonnes, which is entirely domestic sales given the company has not exported any quantities of sugar in 2021-22 sugar season. Sugar realisation was higher by 5.7% to Rs35.3 /kg. The base quarter included Rs45.31 crore of export subsidy pertaining to FY21. Distillery sales witnessed a growth of 66.7% to Rs379.2 crore led by 42.4% increase in distillery volumes driven by commissioning of new 200 KLD capacity in March-2022. The distillery realisation was up by 7% on account of higher proportion of B-heavy ethanol. The company has announced further capacity addition of 450 KLD, which would take its total capacity to 1110 KLD (36 crore litres). This would require investment of Rs450 crore & it would get commissioned in December 2023.

View: Triveni Engineering is one of the most efficient sugar company in the country with sizable crushing capacity. With the current announcement of distillery capex, the company would be utilising sugarcane juice route to produce ethanol supplemented by grain based ethanol production. It’s sugar realisation is also better compared to other sugar millers given 45% of its sugar production is refined sugar. With the increasing sugarcane diversion towards ethanol & aggressive exports of 11 million tonnes, sugar inventory in the country would reach to 5.5 million tonnes by September 2022, which would keep sugar prices firm above Rs35 / kg. However, we believe sugarcane production by farmers is also increasing at a faster pace. We believe sugar industry in India is required to further increase distillery capacities to utilise excess sugarcane to produce ethanol . We believe Triveni’s capex announcement is the step in right direction. We remain positive on the sugar Industry and Triveni Engineering.

Impact: Positive.