Tulsian's multibaggers: Balrampur Chini, Empee Distilleries
SP Tulsian of sptulsian.com picked Balrampur Chini and Empee Distilleries as multibaggers stocks. He expects these stocks to fetch better returns going ahead.
October 09, 2012 / 12:24 IST
SP Tulsian of sptulsian.com picked Balrampur Chini and Empee Distilleries as multibaggers stocks. He expects these stocks to fetch better returns going ahead.
Tulsian is positive on the sugar sector, especially UP based sugar mills. Balrampur Chini is a second largest player in this space, so it can touch Rs 80 in the next six months.He expects Empee Distilleries to test Rs 152-200 in the 18-24 months. Tulsian has a price target of Rs 100 on the stocj for the next six months.Below is the edited transcript of Tulsian's interview with CNBC-TV18. On Balrampur ChiniThey have 14 mills, seven distilleries and seven co-gen facilities. It is second largest sugar producer in Uttar Pradesh (UP). As on June 30, 2012 after posting a net loss of Rs 18 crore in Q1, they are sitting on an inventory of Rs 1,400-1,450 crore. On that, the company has an unrealised gain of Rs 160-175 crore. It is going to get booked by the company in the two quarters - the quarter ended September and quarter ending December. The crushing will start somewhere in the middle of November. This time UP will be the largest sugar producer, surpassing Maharashtra. The unrealised gain of Rs 160-175 core will be real sweetener for September quarter results.Last year for September quarter they had net loss of about Rs 40 crore because sugar mills have virtually no contribution from co-gen and distillery operations because they are not left with any molasses or bagasse after June 30 or July 15. The only turnover during this quarter is from the inventory they hold. Generally, inventories are valued at cost because the accounts get finalised of year ended March. But here the stock which has been priced at about Rs 25-26 per kg in the books is getting sold at about Rs 35. So, their September quarter results will be good.Going forward UP will show 15 percent extra entries in the production for the coming season. Prices of the sugar are likely to remain stable. Even prices of ethanol if you see in the open market are now ruling at Rs 33-34 per litre while it is supplied or taken by oil marketing companies at Rs 27. Earlier these companies used to demand for a higher price of ethanol from government of about Rs 30-31, but now because of good off take in the free market, the companies are not really bothered.So, they have good realisation from power, ethanol and sugar inventory. The coming season also will be giving very good sugar realisation. Overall my call on the sugar sector is positive and more specifically on UP based sugar mills. Since this is a second largest player, I expect the share to touch about Rs 80 in the next six months or so. On Empee DistilleriesThey are presently into breweries. They have presence in all four southern states - Karnataka, Andhra Pradesh, Tamil Nadu and Kerala. The distributors are the state governments in all these four states and the entry barrier is very high because governments do not appoint any new distributor or any new maker for coming in this business. They have very good presence in the breweries business.If one goes by their performance for 15 months ended June 30 on a standalone basis, the company had a topline of about Rs 850 crore, PAT of close to Rs 23 crore and EPS of about Rs 12.50. Empee Distilleries is getting merged into Empee Sugar and post merger the company will be having sugar, breweries, power, and real estate. Empee Distilleries is also having large chunk of land at Sriperumbudur, which they have been trying to monetise for last couple of years but have kept it on hold. But now with the interest reviving in the real estate sector, the promoters of the company are likely to do that again. Going by their track record, even for FY11, the company had a topline of about Rs 500 crore plus. The company declared a dividend of Rs 5 per share. If you go by the share and not going into the complex scheme of the merger, where the company is getting merged into Empee Sugar and the equity is going to be get reduced by 50%. Effectively post merger, the promoters will be having 65% stake in the company. Taking the present price, the market capitalisation of the company post merger also will remain at somewhere around Rs 150-160 crore. On a consolidated basis, they have a debt of close to Rs 400-450 crore. On an enterprise value of Rs 600 crore, if you go purely on enterprise value this company has an enterprise value of more than Rs 2,500 crore or so. Even on the earning front, all the breweries are now doing quite well, even if you see the smaller players. This company is also likely to perform quite well. I am keeping a positive outlook on the stock. With a view of about maybe couple of years or so one can see a price of Rs 152-200 also in next 18-24 months. I am giving a price target of Rs 100 in next 6 months or so. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
