ICICI Direct has given Buy recommendation for Dalmia Bharat Sugar with a target price of Rs. 450 in its research report issued on May 25, 2021

ICICI Direct’s research report on Dalmia Bharat Sugar

Dalmia Bharat Sugar (DBSL) reported strong Q4FY21 results with 32.7% growth in operating profit led by increase in distillery volumes and higher proportion of B-heavy ethanol. Consolidated sales declined 11.1% on account of absence of export volumes given the delay in announcement of export subsidy. However, most sugar exports would be shipped & booked in Q1FY22. Sugar sales were down 18% whereas distillery sales were up 23.2%. The company sold 1.0 lakh tonnes (lt) of sugar largely comprising domestic sales. Distillery volumes were up 10% to 2.1 crore litre. The company changed its depreciation charging method from SLM to WDV for sugar & distillery segment, which resulted in additional depreciation provisioning by Rs 35 crore. PAT fell 16% to Rs 51.9 crore mainly on account of higher depreciation & income tax provisioning.


We believe now market recognises structural earning growth trajectory for sugar companies. Hence, we value the stock at 10x FY23E earnings with a target price of Rs 450/share (earlier Rs 225). We maintain our BUY rating.