Balrampur Chini Mills Ltd Stock Quotes and Charts
what is the future of this company.i have 500 shares @ 98 rs.can i sell or wait for some more gain.
Balrampur Chini<br>Hold<br>Price: Rs 126 Target Price (Sep`10): Rs122<br><br>4QFY09 results lower than estimates<br><br>* 4Q09 profits significantly below our estimates-Balrampur Chini`s<br>(BCML`s) 4QFY09 net profit of Rs388mn, up 544%YoY, was significantly<br>lower than our estimate of Rs680mn. This was mainly due to (a) lower<br>sugar volumes and realisation and (b) lower co-generation and distillery<br>sales than estimates. However, this was partially off-set by tax write backs<br>of Rs130mn pertaining to FY02-05. While sales of Rs3.89bn were 14%<br>lower than our estimates, EBITDA came in at Rs0.75bn vs. our estimate of<br>Rs1.43bn. Lower EBITDA was due to ~9% lower sugar volumes and<br>realisation than estimates. Management acknowledged lower realisation in<br>sugar was on account of poor timing of sales. While we are not concerned<br>about lower sugar sales volume as sugar prices have moved up in 1Q10,<br>(thus leading to inventory gains), lower realisation still remains a concern.<br><br>* Raise our estimates by 11-2% for FY10/11E led by higher sugar<br>realisation– We raise our FY10 profit estimate by 11% to Rs3.65bn on the<br>back of higher sugar realisation, raw sugar and co-generation volumes. We<br>raise our blended sugar realisation assumption by 4% to Rs30.8/kg, in line<br>with management guidance. We believe our landed cane cost assumption<br>of Rs215/quintal (vs. current cost of Rs200/quintal) for FY10E seem<br>reasonable as strong sugar realisation and intense competition among<br>players would lead to higher cane prices as the season progresses. We<br>increase our raw sugar volume estimate to 1.2lt (lakh tonnes) from earlier<br>0.85lt as management guides additional imports of raw sugar in FY10E. We<br>raise our FY11E earnings by 2% to reflect higher sugar realisation.<br><br>* Coal based power contribution may not be significant- Based on<br>management guidance, we assume 100-80mn units of coal based power in<br>FY10/11E respectively. However, given high coal (BCML is yet to identify<br>sources for coal) and in-land transport costs and stable realisation, we<br>believe coal based co-generation may not be significantly profitable. While<br>we continue to believe that co-generation (coal and bagasse based<br>together) provides stability throughout the cycle, we think coal based<br>power will contribute only 2-3% to consolidated EBITDA for FY10/11E.<br><br>* Raise target price marginally, maintain Hold– We continue to value<br>BCML based on 1 year forward up- cycle multiple of 10x FY11EPS of<br>Rs12.2and arrive at our Sep`10 (rolled forward from Sep`09) target price of<br>Rs122 (from Rs119 earlier) and hence maintain Hold at current price<br>(potential downside of 3%). While stock prices may track sugar prices in<br>near term, we think concerns over the longevity/severity of the cycle and<br>higher SAP may emerge, thus impacting the valuation multiples. We<br>believe key risks to our call are sugar/alcohol realisation higher than our<br>estimates & lower cane prices than our assumptions.
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