Buy EID Parry; target of Rs 327: KRChoksey

KRChoksey is bullish on EID Parry (India) and has recommended buy rating on the stock with a target of Rs 327 in its October 30, 2012 research report.

“EID Parry (India) reported net sales de-growth of 4% YoY to Rs 3267 crores. Sugar division registered higher volumes with better realizations however farm input division posted de-growth in revenues. Consolidated EBITDA for the quarter declined 9% YoY to Rs 364 crores on account of margin contraction in farm input division. Consolidated Net profit for the quarter declined 15% YoY to Rs 107 crores aided by higher depreciation and interest expenses.”

“EID Parry (India) reported consolidated net sales de-growth of 4%YoY to Rs 3267 crores. As a standalone entity EID Parry registered 20%YoY growth in net sales to Rs 503 crores. EID Parry Standalone cane crushed rose 13%YoY to 14.42 lac tonne with sugar production higher at 15%YoY to 1.22 lac tonne. Sugar sales registered 25%YoY increase to 1.35 lac tonne. Average sugar realization was higher by 3%YoY at Rs 28,750 per tonne. However lower contribution from sugar subsidiaries led to 10%YoY growth in consolidated sugar sales at 1.59 lac tonne. Additionally Farm input division registered 2%YoY de-growth in revenues at Rs 2661 crores leading to de-growth at consolidated level. Bio-products revenue clocked 8%YoY growth to Rs 48 crores. Consolidated EBITDA registered de-growth of 9%YoY to Rs 364 crores. Consolidated EBITDA margin declined by 68bps YoY to 11.1% mainly on account of farm input division which registered PBIT margin decline of 205bps YoY and bio products division PBIT margin decline of 392bps YoY. EID Standalone clocked EBITDA growth of 68% YoY to Rs 36 crore specifically due to lower other expenditure.”

“Consolidated Net profit for the quarter declined 15%YoY to Rs 107 crores on account of higher depreciation (up 12%YoY) and interest expenses (up 48%YoY). EID Parry Standalone posted net profit at Rs 326 crores as against Rs 49 crores in Q2FY12 on account of recognition of Rs 266 crores bonus debentures as dividend income. Adjusting for the same, net profit for the standalone entity grew 21% YoY to Rs 60 crores. We believe the company would be major beneficiary of rising sugar prices coupled with increasing cane crushing. We maintain our BUY rating on the stock with SOTP based target price of Rs 327,” says KRChoksey research report. 

Shares held by Mutual Funds/UTI

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More