SPA Research's reserach report on Balrampur Chini MillsBalrampur Chini reported dismal set of numbers owing to tepid industry scenario. While the topline declined by 26.6%, net loss more than halved to INR 144 mn in Q2FY16 from INR 639 mn in Q2FY15. Sugar segment remained unprofitable (loss of 140 mn at PBIT level) due to sharp decline in realizations. Q2 being a non production quarter also resulted in low level of operations. With improving prospects for the core sugar segment and progress in ethanol blending programme, BCML remains the best play in the industry. We retain out BUY rating on the stock with a target of INR 75.BCML being one of the largest and most efficient sugar producers in the country is best placed to capitalize on the positive structural changes witnessed by the industry. Improving ethanol dynamics and robust balance sheet will aid profitability. Although slew of measures announced by central government to address key issues is a welcome step, we continue to believe that adoption of revenue sharing mechanism by UP government remains the only long term viable solution to the long prevailing problem in the industry. Currently the stock is trading at 1.3x FY17E BV of INR 46. We continue to retain our BUY rating on the stock with a target of INR 75.For all recommendations, click here 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.
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