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  • 16 May 2022
  • ICICIdirect Research

TRIVENI POSTS STRONG Q4FY22 NUMBERS

TRIVENI - 475 Change: 37.90 (8.67 %)

News: Triveni engineering reported strong results with 28.4% growth in earnings. Consolidated sales saw a decline of 7.8% to Rs.1070 crore (net of excise) on the back of 14.7% de-growth in sugar sales. The decline in sugar sales was mainly on account of lack of exports in current season. We believe the company has not exported any sugar in 2021-22 sugar season. Domestic sales volume were higher by 14.3% to 1.95 lakh tonnes in Q4. Domestic sugar realisation was higher by 8.2% to Rs.34.99 /kg. Distillery sales witnessed a growth of 81.4% to Rs. 283.7 crore on the back of higher ethanol volume & diversion towards B-heavy ethanol. Ethanol sales volume recorded a growth of 23.8% to 2.7 crore litre. Distillery realisation was flat at Rs.56.8 / litre. B-heavy ethanol contributed 93% of the total ethanol produced during the quarter. Operating profit saw a growth of 6.3% to Rs.174.7 crore adversely impacted by lower sugar sales & increase in cost of production (due to hike in sugarcane prices & lower gross recoveries). Profit after tax increased by 28.4% to Rs.109.2 crore mainly on account of lower tax provisioning & higher profits from associates. 

Views: Despite expected higher sugar production in India at 35.5 MT, sugar inventories are likely to come down by 1.5 MT by September 2022 due to record exports of 9.5 MT. We believe sugar prices would move up by Rs. 1-2 / kg in next few months & average sugar realisation for FY23 would be higher by Rs.1/kg. Though, Triveni has not exported any sugar in current season, it would be able to divert addition sugarcane towards ethanol production given expected completion of capex by July 2022. Triveni is divesting its stake in Triveni turbine, which would result in additional cash flow to the tune of Rs. 1200 crore. We believe the company would pay one-time dividend in FY23. We remain positive on sugar sector and Triveni Engineering.

Impact: Positive