Buy Dhampur Sugar Mills; target of Rs 45: LKP Shares

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Buy Dhampur Sugar Mills; target of Rs 45: LKP Shares

LKP Shares is bullish on Dhampur Sugar Mills and has recommended buy rating on the stock with a target of Rs 45. With a stock of 1.35 lac tons at the end of Q1-FY'09 the research firm expects DSM to crush up to a maximum of 2.8 million tons this fiscal by operating for 115 days.

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RELATED NEWS Sugar sector outlook for 2009 stable: Fitch ALSO READ See previous views by LKP Shares See what other Experts & Brokerages are saying about Dhampur Sugar See messages about Dhampur Sugar Dhampur Sugar BSE | NSE 01/06/12 Are Mutual Funds betting on Dhampur Sugar?

LKP Shares is bullish on Dhampur Sugar Mills and has recommended a buy rating on the stock with a target of Rs 45, in its February 14, 2009. "We recommend a BUY on Dhampur Sugar Mills Ltd - DSM based on improved prospects for the sugar business on account of buoyancy in sugar prices arising due to low production in India, increased traction from the co-generation business and savings in interests costs due to swapping of high cost loans (total debt of Rs 6 billion) with low cost loans from the sugar development fund."

"With a stock of 1.35 lac tons at the end of Q1-FY'09 we expect DSM to crush up to a maximum of 2.8 million tons this fiscal by operating for 115 days. DSM sells refined sugar under the brand - Dhampure. Q1-FY'09 witnessed sugar realizations of Rs17.9 per kg as compared to Rs14.3 per kg in the same period last fiscal and after accounting for the notional foreign exchange loss of Rs 50mn, DSM posted a net profit of Rs137mn for the quarter and expanded power capacities now at 145mw with an exportable surplus of 80mw contributed to the earnings during the quarter. We expect DSM to post a net profit of Rs 300mn this fiscal and Rs 550 million next fiscal after accounting for foreign exchange losses and the stock trading at 3xFY'10E earnings can be accumulated by investors with a one-year price target of Rs 45. We recommend a BUY," says LKP Shares' research report.

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To read the full report click on the attachment......