The sugar stocks have remained in structural up trend forming higher peak and higher trough in the long term chart. Shares of Balrampur Chini Mills after the last one month’s breather are seen forming higher base around the last year highs placed around ₹380 levels, highlighted domestic brokerage house ICICI Securities, which has a Buy rating on the stock.
The sugar stock has managed to hold above upward sloping support trend line joining lows since March 2020, highlighting elevated buying demand that signifies inherent strength. The brokerage expects the multibagger stock to maintain positive bias and head higher towards ₹445 levels with time horizon of about three months.
Balrampur Chini (BCML) is the second largest sugar company with sugar crushing capacity of 76000 TCD, distillery capacity of 560 KLD & co-generation capacity of 172 MW. It is undertaking a distillery capex of 490 KLD & modernisation, de-bottlenecking of its sugarcane crushing capacity at multiple plants.
With distillery capex, Balrampur Chini would be able to increase its ethanol volumes 2.2x to 35 crore litre by FY24. Distillery sales to witness 33.6% CAGR to | 1954.8 crore in FY21-24E, which would be 33% of total revenues. It is undertaking modernisation and de-bottlenecking at some plants.
“This would lead to higher sugarcane crushing, better recoveries by FY24. We expect 7% revenue CAGR in FY21-24E. The company is introducing newer sugarcane variety in its catchment areas, which would reduce the dependence on Co-0238,” ICICI Securities note highlighted.
Balrampur Chini Mills Limited is one of the largest sugar manufacturing company in India. The shares of the company have given multibagger return by rallying over 120% in a year’s period whereas it is up about 6% in 2022 (year-to-date or YTD) so far.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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