Buy Balrampur Chini Mills; target of Rs 615: Sharekhan

Sharekhan's research report on Balrampur Chini Mills

Balrampur Chini Mills’ (BCML’s) Q1FY2025 numbers were muted due regulatory issues in distillery operations. Its revenues in Q1FY2025 grew by just 2% and reported PAT fell by 5% (EBIDTA margins stood flat at 11.7%). Sugar production for SY2024-25 is expected to be at 32 million tonnes. Sufficient inventory at end of SY is 5.5 million tonnes. Additional 6 million tonnes available for ethanol production (4 million tonnes) and sugar exports (2 million tonnes). Domestic sugar prices are expected to remain high with expected lower inventory at end of the SY and likely increase in the Sugar MSP.

Outlook

Stock trades at 21x and 17x its FY2024E/25E earnings, respectively. We maintain a Buy with a revised PT of Rs. 615.