Karvy Stock Broking has maintained outperformer rating on Balrampur Chini Mills with a price target of Rs 140 in its report dated February 3, 2010.
Balrampur Chini Mills reported marginal increase of 1.1% YoY (QoQ increase of 14.4%) in revenue to Rs 4.33 billion in Q1FY10. The average sugar realization improved by 71.5% YoY to Rs 30.3 per kg while volume declined by 62.6% YoY to 0.126 mn mt. The operating margins increased from 26.8% in Q1FY09 to 29% in Q1FY10 against expectations of 26.6%. The decline in other expenditure by 18.8% YoY to Rs 358 million resulted in margin improvement of 203 bps. We expect the company report revenue growth 32.5% to Rs 22.53 billion and profit of Rs 3.78 billion in FY10 on back of strong sugar realization. We have revised our valuation from 11xFY10 to 9xFY11 earnings with price target of Rs 140 (previous Rs 163). We maintain our rating to Outperformer, "says Karvy Stock Broking.
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