Balrampur Chini shares up 3% today; sugar stock still down 12% in a month. What's ahead?
Balrampur Chini Mills shares: Elara Securities said the notification was a one-off event and is valid between November 2023 and October 2024; hence, it says there will be impact only on H2FY24-H1FY25 financials.
- Dec 14, 2023,
- Updated Dec 14, 2023 2:33 PM IST
Shares of Balrampur Chini Mills Ltd, which are down 12 per cent for a one-month period, climbed 3 per cent in Thursday's trade amid a broader market rally. With this, the stock has snapped its two-day losing run. The rise on the counter was seen amid hopes the government’s decision to restrict the use of sugarcane juice and syrup for ethanol blending and limiting of the blending of B-heavy ethanol, was a one-off event and things should settle soon.
Elara Securities said the notification was a one-off event and is valid between November 2023 and October 2024; hence, it says there will be impact only on H2FY24-H1FY25 financials. It expects earnings' normalisation from H2FY25.
"Since this exceptional event has significantly dented FY25 financials, we introduce our FY26 estimates and rolling forward our valuation. We reduce our Ebitda by 28 per cent and PAT by 34 per cent for FY24E and Ebitda by 57 per cent and PAT by 67 per cent for FY25E. We reiterate Accumulate with a lower target of Rs 431 from Rs 495 based on a SOTP method, assuming the sugar segment valuation at 8.5 times FY26 EV/Ebitda and distillery at 10 times FY26E EV/Ebitda," the brokerage said.
The brokerage has ‘accumulate’ rating on Balrampur Chini Mills shares with a lower target of Rs 431. Sharekhan has suggested a "Buy' on the stock with a target of Rs 475.
JM Financial said while the government move does imply a change of course for the sugar industry -- given the
significant push to ethanol blending by the government in the past 4-5 years, the measure is temporary and will be reversed once there is an oversupply scenario again.
"Our calculations suggest that these measures will not materially impact Balrampur Chini’s bottomline (our estimate cut by 5-7 per cent, largely on higher cane price assumption) as lower distillery volume (juice-based ethanol) will be offset by higher sugar sales/profits, higher C molasses-based ethanol volume (more profitable on per litre basis), and higher average sugar realisation (given a tighter demand-supply scenario). We roll forward with a March 2025 target of Rs 500 (earlier June 2024 target of Rs 490), basis 15 times FY26EPS. We maintain BUY and believe the current weakness can be an opportunity to accumulate," JM Financial said.
On Thursday, the scrip rose 3.07 per cent to hit a high of Rs 390.40 on BSE.
Also read: India Shelter Finance IPO subscribed 2.3x on Day 2 so far; grey market premium rises
Shares of Balrampur Chini Mills Ltd, which are down 12 per cent for a one-month period, climbed 3 per cent in Thursday's trade amid a broader market rally. With this, the stock has snapped its two-day losing run. The rise on the counter was seen amid hopes the government’s decision to restrict the use of sugarcane juice and syrup for ethanol blending and limiting of the blending of B-heavy ethanol, was a one-off event and things should settle soon.
Elara Securities said the notification was a one-off event and is valid between November 2023 and October 2024; hence, it says there will be impact only on H2FY24-H1FY25 financials. It expects earnings' normalisation from H2FY25.
"Since this exceptional event has significantly dented FY25 financials, we introduce our FY26 estimates and rolling forward our valuation. We reduce our Ebitda by 28 per cent and PAT by 34 per cent for FY24E and Ebitda by 57 per cent and PAT by 67 per cent for FY25E. We reiterate Accumulate with a lower target of Rs 431 from Rs 495 based on a SOTP method, assuming the sugar segment valuation at 8.5 times FY26 EV/Ebitda and distillery at 10 times FY26E EV/Ebitda," the brokerage said.
The brokerage has ‘accumulate’ rating on Balrampur Chini Mills shares with a lower target of Rs 431. Sharekhan has suggested a "Buy' on the stock with a target of Rs 475.
JM Financial said while the government move does imply a change of course for the sugar industry -- given the
significant push to ethanol blending by the government in the past 4-5 years, the measure is temporary and will be reversed once there is an oversupply scenario again.
"Our calculations suggest that these measures will not materially impact Balrampur Chini’s bottomline (our estimate cut by 5-7 per cent, largely on higher cane price assumption) as lower distillery volume (juice-based ethanol) will be offset by higher sugar sales/profits, higher C molasses-based ethanol volume (more profitable on per litre basis), and higher average sugar realisation (given a tighter demand-supply scenario). We roll forward with a March 2025 target of Rs 500 (earlier June 2024 target of Rs 490), basis 15 times FY26EPS. We maintain BUY and believe the current weakness can be an opportunity to accumulate," JM Financial said.
On Thursday, the scrip rose 3.07 per cent to hit a high of Rs 390.40 on BSE.
Also read: India Shelter Finance IPO subscribed 2.3x on Day 2 so far; grey market premium rises