Sharekhan's research report on Dhampur Sugar Mills
Increased distillery capacity to 650 KLPD will lead to a 29% CAGR in ethanol sales to Rs. 1,245.2 crore by FY2024; ethanol’s contribution to total revenue will increase to 27% in FY2024 from 14% in FY2021. Better revenue mix and driving efficiencies focusing on Total Productive Maintenance (TPM) would help EBITDA margin to improve to ~15% in FY2024 from 11% in FY2021 and will consistently improve in the years ahead. Strong profitability and better working capital management would lead to cumulative free cash flow of ~Rs. 450 crore over FY2022-FY2024; Return profile would improve with RoE/RoCE standing at 18.6%/19.8% in FY2024.
Outlook
We re-initiate coverage on Dhampur Sugar Mills Limited (DSML) with a Buy recommendation, assigning a price target of Rs. 692. Discounted valuations at 10.5x/8.4x its FY2023E/FY2024E EPS and strong growth prospects (focusing on Ethanolisation) make it another strong play in the sugar sector.
More Info
At 13:31 hrs Dhampur Sugar Mills was quoting at Rs 545.50, up Rs 13.20, or 2.48 percent.
It has touched an intraday high of Rs 561.70 and an intraday low of Rs 532.30.
It was trading with volumes of 31,584 shares, compared to its thirty day average of 113,833 shares, a decrease of -72.25 percent.
In the previous trading session, the share closed down 0.21 percent or Rs 1.10 at Rs 532.30.
The share touched its 52-week high Rs 566.80 and 52-week low Rs 173.50 on 15 March, 2022 and 05 April, 2021, respectively.
Currently, it is trading 3.76 percent below its 52-week high and 214.41 percent above its 52-week low.
Market capitalisation stands at Rs 3,621.44 crore.
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