Dharani Sugars has target of Rs 54: SP Tulsian

Dharani Sugars and Chemicals has target of Rs 54, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Dharani Sugars have presence in Tamil Nadu. They have three integrated sugar mills with combined capacity or 10000 TCD for sugar, about 37 Megawatt (MW) for cogen and about 160 kilolitre per day of distillery."
He further added, "If we go financial performance of the company, for first half they posted a profit after tax (PAT) of close to about Rs 21 crore which was at Rs 10 crore plus for whole of FY12. That means they posted double the PAT in the first six months what they earned in FY12 of the whole year."
"Going forward the only problem with the company is that they have very high debt. In fact the debt is to the extent of about Rs 300 crore and if I include the working capital loan also which is backed by the inventory they have a debt of about close to about Rs 400-450 crore and that’s a reason we see a very low market cap of the company at Rs 150 crore."
"Going forward if you take a call on the sugar cycle Uttar Pradesh is facing a little problem because of the higher cane prices and because of lower realizations but Tamil Nadu sugar mills are likely to do quite well, they are going to see the increase in production and the advantage with Tamil Nadu sugar mills are always that they have a longer crushing season. May be in the range of about 270-300 days as against in the UP it is 160-180 days. So going by the financial performance, having seen an EPS of about Rs 7 in the first half of FY13 it is likely that the EPS is likely to be at about Rs 12-13 for whole of FY13."
"But I have my positive stance on the working of the company for FY14 as I stated that I see good working and good results coming in from the Tamil Nadu based all sugar mills. It is not only in respect to Dharani and when you make a comparative valuation may be the stocks like EID Parry or Ponni Sugars, this stock looks quite cheap compared to any two other stocks. So one can keep a view of about one year but six months price target I have given at about Rs 54." Disclosure: I have no holdings in the above stock.