ICICI Direct has given Buy recommendation for Dalmia Bharat Sugar with a target price of Rs. 200 in its research report issued on Feb 06, 2021
ICICI Direct’s research report on Dalmia Bharat Sugar
Dalmia Bharat Sugar reported a strong set of number with revenue growth of 20.1% & PBT growth of 13.5%. The healthy revenue growth was led by 17.9% increase in sugar sales led by higher domestic sales quota during festive season & 31.3% jump in distillery volumes given new capacities have been commissioned in the last one year. Operating profit was flat due to increase in FRP for Maharashtra mills & significant reduction in inventory (the company is holding only new season sugar inventory as on December 2020, which is a high cost inventory). However PBT grew 13.5% due to significant reduction in interest cost given debt levels have been considerably lower compared to last year. PAT growth of 39% can be attributed to lower tax provisioning during the quarter. The company sold 1.45 lakh tonnes (lt) and 2.1 crore litre of ethanol/ENA during the quarter.
Outlook
We value stock at 6x FY22E earnings with target price of Rs 200 (earlier Rs 180) and maintain BUY rating.
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