Buy Balrampur Chini Mills; target of Rs 475: Sharekhan

Sharekhan's research report on Balrampur Chini Mills

Balrampur Chini Mills’s (BCML’s) Q1FY2024 numbers were strong, led by higher volumes and realisation in both sugar and distillery businesses. Revenue and PAT grew by 29% and 5x y-o-y, respectively, while EBITDA margin improved by 763 bps y-o-y. Management expects a further 10% increase in crushing in SS 23-24 (over ~16% increase achieved in SS 22-23). EBITDA margins are likely to improve due to better sugar recovery. Post capacity expansion, ethanol production capacity is expected to be at 35 crore litre. The company targets 31-32 crore litre production (lower due to FCI rice procurement issue) and 28-29 core litre sales for FY24.

Outlook

Stock trades at 15x/13x its FY2024E/FY2025E earnings. We maintain a Buy with an unchanged price target of Rs. 475.