Balrampur Chini (BRCM) reported 4QF09 results with revenue, EBITDA and adjusted PAT at Rs3.8 bn, Rs758 mn and Rs288 mn, respectively. The
revenue and profit growth for the quarter was driven primarily by high sugar and distillery realization. As of 30 September, the company was carrying white sugar inventory of 0.09 mn tons (around 20% of expected F10 production), which affected current quarter revenue but augers well for the next quarter profits with domestic sugar prices up ~30% QoQ.
Expect domestic sugar production to increase by 40% to around 21 mn tons in 2010-2011, driven largely by production response of sugarcane to
higher prices in the current season. Higher cane availability implies better capacity utilization and strong operating leverage for BRCM.
BRCM is expected to report an EPS of Rs 12.60 for FY10 and between Rs 15 to Rs 18 for FY11. It is still the top pick in the Sugar Sector with price targets ranging from Rs 170 to Rs 190 by various brokerages.
