PINC Research has downgraded its rating to hold on Balrampur Chini Mills in its May 7, 2008 research report. "Balrampur Chini Mills Ltd.’s (BCML) net sales for Q2FY08 were down 22% YoY to Rs 3.1 billion, mainly due to lower sugar volumes and realisations. However, 61% surge in cogen revenues to Rs 947 million stemmed the decline. Revenues of sugar division slumped 30% to Rs 2.5 billion as a result of 34% drop in volumes to 134.7 k mt and a marginal 1% decline in realisations to Rs 14.5 k/mt. Growth in cogen division’s revenues was primarily on back of commissioning of capacities at Kumbhi (10 MW), Gularia (20 MW) and Rauzagaon (16 MW)."

"We have a positive outlook for the sugar sector as we expect sugar prices to firm up over the next few quarters on back of lower production estimates, stable growth in consumption and exports. BCML, with its scale of operations, efficiency levels and integrated operations should capitalise on the positive outlook for the sector. However, considering the concerns relating to increase in cane costs for SS 08-09 and possible government intervention to control sugar price, we downgrade our recommendation to ‘HOLD’ until clarity emerges on the same," says PINC research report.

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