Buy Balrampur Chini Mills, target price Rs 465: JM Financial

JM Financial has buy call on Balrampur Chini Mills with a target price of Rs 465. The current market price of Balrampur Chini Mills is Rs 394.6.

Balrampur Chini Mills, incorporated in the year 1975, is a Mid Cap company (having a market cap of Rs 8078.96 Crore) operating in Sugar sector.

Balrampur Chini Mills key Products/Revenue Segments include Sugar, Alcohol (Industrial), Power, Bagasse, Export Incentives, Others for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 1124.83 Crore, up 2.76 % from last quarter Total Income of Rs 1094.59 Crore and down -7.67 % from last year same quarter Total Income of Rs 1218.23 Crore. Company has reported net profit after tax of Rs -31.99 Crore in latest quarter.

The company’s top management includes Mr.Vivek Saraogi, Mr.Naresh Dayal, Mr.D K Mittal, Mr.Krishnava Dutt, Ms.Veena Hingarh, Ms.Mamta Binani. Company has Lodha & Co. as its auditors. As on 30-09-2022, the company has a total of 20 Crore shares outstanding.

Investment Rationale
The brokerage remains positive on the sugar sector (especially efficient companies)as government policies (sugarcane price/MSP/ethanol prices) would ensure survival of the weakest. Hence, well-managed sugar companies could generate enormous earnings/cashflows in the process. While the regulation of sugar exports appear optically negative, the brokerage is convinced that it is aimed at a) ensuring adequate stock for local consumption, thus avoiding any undesired rally in domestic price, and b) continuity in the ethanol programme (ethanol momentum could get upset in case of a significant rally in sugar prices).

Promoter/FII Holdings
Promoters held 42.42 per cent stake in the company as of 30-Sep-2022, while FIIs owned 19.07 per cent, DIIs 18.2 per cent.