Sharekhan's research report on Dhampur Sugar Mills
Dhampur Sugar Mills Limited (DSML) registered mixed performance in seasonally weak Q2FY2023 with 42% y-o-y revenue growth to Rs. 644.2 crore, while EBITDA margin fell by 694 bps y-o-y to 4.8% and PAT decreased by 54% y-o-y to Rs. 11.5 crore. The company expects cane production to rise by 5-7% in the next sugar season. Sugar realisations are likely to remain stable in the next sugar season. Proposed 130 KLPD ethanol expansion (including 100 KLPD of grain) would lead to ethanol production worth 14-15 crore litre in FY2023 and 16 crore litre in FY2024. The stock trades at 10.3x and 7.9x its FY2023E and FY2024E earnings, respectively.
Outlook
We maintain our Buy recommendation on the stock with a revised PT of Rs. 260.
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