Buy Dalmia Bharat Sugar; target of Rs 180: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Dalmia Bharat Sugar

Sugar companies with aggressive sugar exports have been able to significantly reduce sugar inventory, generate huge cash flows & reduce considerable working capital debt by September 2020. Dalmia Bharat sugar (DBSL) also exported more than 1.7 lakh tonnes (lt) of sugar in 2019-20 sugar season, generated operating cash flow of ~Rs 900 crore in the last six months & reduced working capital debt by ~Rs 770 crore. With 4.4 crore litre of distillery volumes in H1FY21, the company is utilising its 240 KLD capacity at more than 100%. We believe the company would be able to divert more than 60% of sugarcane towards B heavy ethanol that would result in ~50,000 tonnes of sugar sacrifice for additional ethanol production.

Outlook

With significant reduction of sugar inventory through export & sacrifice towards B-heavy ethanol, DBSL would be able to generate cash from operations to the tune of Rs 607 crore & Rs 444 crore in FY21E & FY22E, respectively. We expect debt reduction of Rs 790 crore by FY22E. With new addition in distillery capacities, the visibility of revenues & earnings growth has extended for next five years. We revise our target price to Rs 180 (from earlier target price of Rs 160) and maintain our BUY recommendation.

For all recommendations report, click here

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