Balrampur Chini Q2 Results Review

Balrampur Chini Mills Ltd.’s Q2 FY24 revenue grew 38% YoY to Rs 15.4 billion, surpassing our estimate by 5%, with the sugar and distillery segments too reporting healthy revenue growth on improved volumes and realisations.

Sugar revenue rose 18.5% YoY to Rs 11.1 billion, in line with our estimate, driven by 4.2% YoY increase in sugar sale volumes and 5.6% YoY surge in realisation.

Distillery revenue grew 143.5% YoY to Rs 5.6 billion, driven by 114.3% YoY higher ethanol volumes and 9.1% YoY increase in ethanol realisation (more than we estimated).

Balrampur Chini Mills’ consolidated Ebitda turned positive at Rs 1.6 billion (35% above our estimate) versus a loss of Rs 159 million in Q2 FY23. However, sugar segment Ebit of Rs 391 million (versus loss of Rs 902 million in Q2 FY23) was 25% lower than our estimate, with an Ebit per tonne of Rs 1,528.

Distillery Ebit grew 50% YoY to Rs 1,093 million and was 81% above our estimate. Profit of Rs 311.3 million from sale of land and increase of Rs 713 million in the net asset value of shares held in associate company (Auxilo Finserve) caused other income to jump by 833% YoY to Rs 1,095 million.

Consequently, reported profit after tax came in at Rs 1.7 billion, 299% above our estimate. We have tweaked up our FY24/25E revenue by 2% each, anticipating higher realisations in sugar and ethanol.

We have raised FY24E/25E Ebitda by 14%/11% to factor in higher profitability forecast in the sugar segment. Reiterating ‘Buy’ with an SoTP-based target price of Rs 510 (from Rs 478), based on implied FY25E price/earning of 15 times and enterprise value/ Ebitda of 10 times.

Key risks:

Lower-thanexpected recovery rate and fall in sugar prices.

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