Aditya Birla Money is bullish on Balrampur Chini Mills and has recommended accumulate rating on the stock with a target price of Rs 61.6, in its research report dated February 11, 2015.
Aditya Birla Money's report on Balrampur Chini Mills
Net sales for 3QFY15 increased by 21.9% YoY to Rs 8416.9 mn led by across the board healthy sales growth of 18.9%, 7.1% and 91.2% YoY in sales of sugar, distillery and cogen divisions to Rs 7363.2 mn, Rs 664.5 mn and Rs 1112.0 mn respectively.
The growth in sugar division is mainly volume led, with increase in sales volume by 24.2% YoY to 0.24 mn tonnes, partially offset by 4.9% YoY decrease in free sale sugar realisation at Rs 28.7/Kg. Sugar division posted EBIT loss of Rs 1408.1 mn in 3QFY15 as against loss of Rs 772.3 mn in 3QFY14. Profitability was impacted due to subdued sugar realisations and inventory write downs. As of 3QFY15, the company is holding 0.19 mn tonnes of sugar inventory @ Rs 26.75/Kg.
Sales growth in distillery division was led by 15.0% YoY increase in blended realisation to Rs 39.3/ltr, partially offset by 8.6% YoY decline in sales volume at 16274 KL. This division posted increase in EBIT of 22.3% YoY to Rs 314.3 mn, with margin expansion of 6 ppts YoY to 47.0%, led by increase in blended realisation. Out of total distillery sales of 16274 KL in 3QFY15, the company has supplied ethanol to the tune of 6108 KL with an average realization of Rs 39.2 per litre and rest was RS/ENA @ Rs 39.4/ltr.
Cogen segment delivered good performance on account of improved volumes and realizations. Sales volume grew by 49.1% YoY to 137.2 mn units. Per unit realisation was at Rs 4.82 in 3QFY15 v/s Rs 4.29 in 3QFY14. Cogen division posted 186.1% YoY increase EBIT to Rs 666.3mn and EBIT margin increased by 20 ppts YoY to 60%.
Overall, in 3QFY15, the company posted EBITDA loss of Rs 267.3 mn as compared to loss of Rs 80.7 mn in 3QFY14. The company posted PAT loss of Rs 656.9 mn in 3QFY15 as compared to loss of Rs 507.6 mn in 3QFY14.
"At CMP, the stock is trading at P/BV of 1.0x FY16E BV. Our rolled over Mar16 fair value per share comes to Rs 61.6 (based FY16E P/BV of 1.0x). We reiterate Accumulate rating on the stock with Mar16 price target of Rs 61.6/share", says Aditya Birla Money research report.
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