November 16, 2016 / 13:09 IST
EID Parry (EID) reported Q2FY17 PAT of Rs 817 mn vs. loss of Rs 370 mn in Q2FY16, a swing of Rs 1 bn. This is playing out as per our expectation of a positive swing for the company FY17 onwards, on rising sugar prices, higher downstream contribution, turnaround in refinery operations and strong growth prospects for nutraceuticals. The management expects SY17 be a deficit year for India and inventory levels to correct to 5.5 mnt by SY18. EID expects to crush the same amount of cane as last year (4.9 mnt), with sugar prices staying firm.
We maintain our positive stance on EID for both its sugar and farm inputs business. EIDest TP remains unchanged but we see incremental upside in Coromandel. We maintain BUY with a revised SOTP-based TP of Rs 350 (Rs 250/sh for 62% holding in Coromandel with a 20% hold co discount; Rs 60/sh for sugar ops; Rs 40/sh for bio-products).
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