Balrampur Chini Mills Ltd. share price target

Weekly Eco Wrap: Markets jittery as virus spreads. BRCM: Higher ethanol sales to support profitability. Automobiles: Feb'20 Auto Sales Weak for most segments; PVs, tractors ahead

The company has commissioned a new 160 KLD distillery during the quarter. This has enabled BCL to sell up to 18 crore litre in a year. We expect sales volume of 11.8 crore & 16.6 crore litre in FY20E & FY21E, respectively. In the current crushing season, the company is diverting 40% of its sugarcane towards B heavy ethanol. BCL can divert up to 55% of its sugarcane toward B heavy ethanol to optimally utilise its distillery capacity. We expect 31.3% CAGR of distillery sales in FY19-21E. On a like to like basis, recovery rates have improved in current season. However, due to diversion...

The company is likely to commission 160 KLD distillery capacity in December 2019, which would increase its distillery volumes from 11.0 crore litre in FY19 to 17 crore litre in FY21E. Oil marketing companies have floated tenders for 511 crore litre of ethanol for 2019-20. We believe UP based sugar mills would significantly increase the supply of ethanol to OMCs this year. Moreover, higher realisation of B heavy ethanol would prompt the companies to divert more sugarcane towards the production of B heavy ethanol. We expect the company to divert 50% of sugarcane towards B...

Balrampur Chini (BCML) being one of the largest and most efficient sugar producers in the country with fully integrated distillery and power capacity.

Indian sugar sector has been known for its cyclical nature and volatility.

WPI inflation eased to 4.5% in Aug'18 from 5.1% in Jul'18. The softening was led by food inflation at (-) 2.3% versus (-) 0.9% in Jul'18. However, cereal inflation inched up by more than 150bps to 5.1% in Aug'18. While both retail and wholesale inflation fell in Aug'18 from Jul'18 levels, the 5% fall in INR since last policy implies RBI is likely to raise rates by 25-50bps in its October policy. Much depends upon the trajectory of INR till policy decision....

We hosted a roadshow with the management of Balrampur Chini (BRCM). Following are the key takeaways: (1) sugar up 15% over the past fortnight, (2) bailout to help sustain short-term prices, (3) exports the key to sustainable long-term pricing, (4) cost under-recoveries persist, and (5) byproduct profitability to remain intact....

We hosted a roadshow with the management of Balrampur Chini (BRCM). Following are the key takeaways: (1) sugar up 15% over the past fortnight, (2) bailout to help sustain short-term prices, (3) exports the key to sustainable long-term pricing, (4) cost under-recoveries persist, and (5) byproduct profitability to remain intact....