Balrampur Chini Mills, Dwarikesh Sugar shares: Q1 results preview; stock that Elara prefers

The June quarter is likely to be a subdued quarter for the sugar industry due to declining sugar and ethanol volumes on account of lower year-on-year (YoY) quota allocations, Elara Securities said in its preview note. Around 5 per cent growth in sugar price and 10-13 per cent rise in blended distillery realisation would partly offset the loss of lower volume and input cost pressures, it said while preferring Balrampur Chini Mills Ltd over Dwarikesh Sugar Industries Ltd from its tracked sugar stocks.

For the quarter, the domestic sugar sales quota was up 8 per cent YoY at 7.8 million tonnes. Domestic sugar realisation stood at Rs 38.50 per kg (ex-mill), up 5 per cent YoY and largely flat sequentially. Despite the increase in domestic quota, ex-mill sugar prices have been resilient, the brokerage noted.

"The changes in the Ethanol Procurement Policy this year are likely to be a one-off (as a precautionary measure against the risk of low sugar production) and valid between November 2023 and October 2024. Hence, these changes may impact only H2FY24-H1FY25 financials. We expect normalization from H2FY25. We have a neutral view on the sugar sector in the short term, given earnings strain in H1FY25, but we
retain our positive stance in the medium to long term, due to the ethanol blending program," it said.

For Dwarikesh Sugar Industries, Elara expects adjusted net profit to drop 77.40 per cent to Rs 9.2 crore for the June quarter from Rs 40.60 crore in the same quarter last year. It sees sales dropping 33.50 per cent YoY to Rs 379.90 crore from Rs 571.20 crore. The brokerage has 'under review' rating on thus stock.

For Balrampur Chini, Elara sees adjusted net profit declining 22.2 per cent to Rs 57.20 crore for the June quarter from Rs 73.50 crore in the same quarter last year. It sees sales falling 2.7 per cent YoY to Rs 1,351 crore. from Rs 1,387 crore YoY.  The brokerage has an 'Accumulate' rating on Balrampur Chini Mills.