Sugar stocks are recovering with a positive outlook; Triveni and Balrampur reached new heights

Shares of sugar companies were in demand in intraday trading on Tuesday and had climbed as much as 10 percent amid high volumes on a good outlook. Triveni Engineering & Industries, climbed 9% to Rs 244, and broke its previous high of Rs 235 reached on December 28, 2021 on BSE. Likewise, Balrampur Chini Mills jumped 7% to Rs 399, and surpassed its previous record of Rs 398.25 hit on October 18, 2021.

Dhampur Sugar Mills, Dalmia Bharat Sugar and Industries, Avadh Sugar, Dwarikesh Sugar, EID Parry (India), Mawana Sugars and Uttam Sugar Mills rose 5-10% on BSE. In comparison, the S&P BSE Sensex was up 0.53% to 59,498 at 10:42 a.m.

Sugar factories are expected to see their revenues and profitability improve during the 2022 season (SS 2022; October 2021 to September 2022), according to a CRISIL report.

Sugar prices are forecast to rise 16 to 17 percent this season, compared to a marginal decline last year, driven by a pickup in industrial demand and increased exports. An increase in consumption in a context of stable production should deplete stocks, resulting in a sharp increase.

Higher sales volumes and higher achievements will drive revenue growth of 18-19%. Cane costs, meanwhile, are expected to increase at a slower pace of 8% in northern India and 3% in southern India. This would provide a wide margin for improvement in operating profitability, or earnings before interest, taxes, depreciation and amortization (Ebitda), which is expected to increase by 300 to 400 basis points, CRISIL said. CLICK HERE FOR THE FULL REPORT

In November, CRISIL Ratings upgraded its rating on the long-term banking facilities of Balrampur Chini Mills Ltd (BCML) to “CRISIL AA + / Stable” from “CRISIL AA / Positive”. The rating action takes into account the improved commercial risk profile, driven by increasing diversity and better profitability of the distillery division, the ethanol produced being supplied at remunerative prices for blending with gasoline. Declining fluctuations in the price of ethanol, which is linked to the price of sugarcane, has helped mitigate the volatility in business performance associated with the sugar industry, the rating agency said in its reasoning.

Meanwhile, ICRA expects Triveni Engineering (TEIL) revenue in fiscal 2022 to remain stagnant, despite higher distillery division revenue offset by lower sugar volumes (so much national than exported). In addition, a greater diversion of sucrose to high B molasses / juice ethanol would moderate inventory levels and therefore reduce its working capital borrowing levels, especially during the year. 2024.

Additionally, TEIL embarked on the production of country spirits in FY2021, further facilitating downstream integration. In addition, TEIL’s 60 kiloliters per day (KLPD) grain-based distillery is expected to begin operations in the fourth quarter of fiscal 2022, which should strengthen its operational profile and improve revenue diversification, the company said. ICRA in November.

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