Ugar Sugar Works can touch Rs 20: SP Tulsian

Ugar Sugar Works can touch Rs 20, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Ugar Sugar Works is a prominent sugar mill having presence in Karnataka. They are having 2 sugar mills, one with a capacity of 12000 TCD and the second with the capacity of 3000 TCD and 44 Megawatt of cogen and matching distillery capacity."

He further added, "If we see the inventory carried by the company as on 31 March 2012, they have 16 lakhs sugar bags which are valued at about Rs 22-23 in the books of the company and now with huge increase in the realizations of sugar, which is now sold at Rs 33 per kg, the company is likely to make a windfall gain in this inventory, which will be getting sold by the company in the next 2 quarters. Hence the financial performance of the company during the off season during these 2 quarters is likely to get boosted by the better realizations of the inventory."

"Going forward for this crushing season which will be starting from October 1 2012, even the situation is likely to remain quite robust because of the estimated lower production of sugar in the country to about 25 million tonne and this company is likely to enjoy an advantage because of the higher recovery of about 12-13% in Karnataka, which is largely enjoyed by all sugar mills."

"As we have seen yesterday, infact all the sugar stocks have seen correction largely because of their presence in the F&O because some of them have been excluded from the F&O or maybe some regulatory actions are apprehended from the government which is keeping these sugar stocks under check. But this stock looks quite reasonable at the current level, where the price of Rs 20 can be expected in the next 6 months or so."