Sweetness magnified! This multibagger sugar stock zoomed over 240% in one year

Shares of Dwarikesh Sugar Industries Limited (DSL) have delivered a multibagger return to its shareholders in the last 12 months. The stock rose 4 per cent to hit an intraday high of Rs 95.35 on the Bombay Stock Exchange (BSE) on Wednesday.
 
In the past one year, the share price jumped from Rs 27.5 to Rs 95.35, logging around 247 per cent return in this period. An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 17.36 lakh today.
 
Long-term investors have made big gains by investing in this stock as it has surged over 2,100 per cent in the last ten years. With a market capitalisation of more than Rs 1,760 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
 
Sugar stocks are in focus after Finance Minister Nirmala Sitharaman levied additional excise duty on fuel sold without blending it with ethanol or biodiesel.
 
"Blending of fuel is a priority of this Government. To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of Rs 2 per litre from the 1st day of October 2022," Sitharaman said in her Budget speech in the Lok Sabha yesterday.
 
Ethanol is a byproduct of sugar manufacturing. Brokerage house ICICI Direct said this would encourage ethanol blending of fuel and will be positive for sugar companies.
 
It added that the company is the second-largest and one of the most efficient sugar companies in India. Along with sugarcane juice, B-heavy, it is also utilising grain-based ethanol to leverage the ethanol opportunity in India.
 
"We expect 3x increase in distillery volumes to boost earnings with CAGR of 40.4 per cent during FY21-24E. With increasing profitability and a reduction in sugar inventory, the company would be able to generate cumulative Rs 517 crore free cash flows in the next three years. It would completely de-leverage the balance sheet. We value the stock at Rs 135, valuing the business at 3x FY23 BV," the brokerage house added.
 
The company reported over 286 per cent rise in standalone profit at Rs 28.8 crore for the quarter ended December 2021. Profit in the year-ago period stood at Rs 7.4 crore. Revenue from operations rose to Rs 601 crore in the same quarter from Rs 381 crore in the year-ago period.