Buy Balrampur Chini Mills; target of Rs 425: Sharekhan

Sharekhan's research report on Balrampur Chini Mills

Commencement of Maizapur distillery unit led to increased distillery capacity to 880KLPD from 560KLPD earlier (another 170KLPD will be added by Q3). Distillery contribution will go up to 30% from 20% in FY2022 with a production of 35cr litre in FY2023. The government has allowed 6mn tonne of sugar exports in the first tranche and another 2-4mn tonne will be allowed by the end of the sugar season. BCML has already contracted for 70% of allocated exports of 1.99lakh. With an 8% increase in expected higher yields, higher export sales and rising contribution from the distillery business, H2FY2023 performance is expected to be much better compared with HFY2023.

Outlook

We reiterate our Buy recommendation on Balrampur Chini Mills Limited (BCML) with a revised PT of Rs. 425. The stock trades at 13.9x and 12.2x its FY2024E and FY2025E earnings, respectively.