Sharekhan's research report on Balrampur Chini Mills
Balrampur Chini Mills Limited (BCML) ended FY2022 on a flat note, affected by lower sugar production and lesser recovery due to weather vagaries. Revenue stood flat at Rs. 4,846 crore, while EBITDA margin was stable at 14.4% despite lower production and higher cost. BCML has undertaken various steps to improve cane availability and sugar productivity. Benefits of the same will be accrued in FY2024. With doubling of ethanol capacity to 1,050 KLPD, BCML expects ethanol production of 35 crore litres in FY2024. Better mix will help improve overall EBITDA margin. Focus on consistent improvement in sugar production and higher ethanol production will help in driving higher cash flows and deriving better return ratios. Recent correction provides a good entry opportunity.
Outlook
We maintain Buy with a revised PT of Rs. 450.
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