Buy Dalmia Bharat Sugar; target of Rs 490: ICICI Direct

ICICI Direct's research report on Dalmia Bharat Sugar

Dalmia Bharat sugar (DBS) is the only sugar company present in UP and Maharashtra. The company has sugar crushing capacity of 39000 TCD (5.5 lakh tonnes pa), distillery capacity of 705 KLD (21 crore litre pa), co-generation capacity of 102 MW & wind power of 16.5 MW (total 30 crore units saleable power). • The company has expanded its distillery capacity from 8.5 crore litre to 21 crore litre. It would further increase its distillery capacity to 24 crore litre in the next one year through expanding grain based ethanol capacity.

Outlook

We expect 36.1% CAGR in distillery revenues, led by ethanol volumes, to boost the company’s earnings at 16.1% CAGR during FY22-24E • We maintain our BUY rating on the stock. We value the stock at Rs 490, ascribing a multiple of 10x FY24 earnings.