Of late, the sugar stocks have been on a roll. Amid the ongoing upward trend, the shares of Balrampur Chini Mills Limited have doubled investors' money in the last 12 months.
In the past one year, the share price jumped from Rs 220 to Rs 491, logging around 124.5 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 11 lakh today. Long-term investors have made big gains by investing in this stock as it has surged over 780 per cent in the last ten years.
The stock ended 6.76 per cent at Rs 451.40 against the previous close of Rs 422.80 on BSE. It rose 9 per cent to hit an all-time high of Rs 491 on Friday.
With a market capitalisation of more than Rs 9,900 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages
Brokerage firm Systematix noted that Balrampur Chini leads private sugar companies’ pack in ethanol market share (5 per cent in FY21). Following the regulation mandating 20 per cent ethanol blending in petrol by CY25, the company has expanded its distillery capacity by ~1.75x in the last three years.
It is augmenting the capacity further by 2x, making it the largest ethanol producer in Uttar Pradesh and the second largest in India.
Systematix expects the company to register 20/21 per cent EBITDA/EPS CAGR over FY21-24E as the product mix shifts towards remunerative ethanol (B-heavy). Improvement in its balance sheet and return ratios will help it command a premium multiple.
"We like its conservative risk strategy and the focus on profitable segments, which has resulted in a steady improvement in profits. We initiate coverage on the stock with a BUY rating and a SoTP-based target price of Rs 605, implying 14.6x FY24E P/E and 10x FY24E EV/EBITDA," it added.
According to MarketsMojo, the company has declared positive results in December 2021 after 2 consecutive negative quarters. It has a strong ability to service debt as the company has a low Debt to EBITDA ratio of 0.71 times.
The technical trend has improved from Mildly Bullish on March 2, 2022 and the stock is technically in a Bullish range now. Multiple factors for the stock are Bullish like MACD, Bollinger Band, KST, DOW and OBV.
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