Sunday, April 25, 2021

Balrampur Chini Mills Ltd (500038) : Improvement in the business risk profile

Balrampur Chini Mills Ltd (500038) closes   at 266.55  with  a  Fall  of   -0.50%   on    23-April-2021  with formation of  a  Small Red  Candle    on Daily  Price Chart.

About the Company : BCML is one of the largest sugar producers in India. The operations of the company are forward integrated, manufacturing ethanol, using molasses' a by-product of sugar, and power, using cogeneration from bagasse,  generated out of sugar manufacturing. Its facilities consist of ten sugar mills in Uttar Pradesh with a combined capacity of 76,500 tonnes per day (TPD) of sugarcane, 520 kilo litres per day (KLPD) of distillery and 165.2 megawatt [MW] of saleable cogeneration capacity. The Saraogi family, the promoters, held 41.21% of the company's equity capital as on December 31, 2020.

Sector Update : Positive

Strength :  1. Established market position and diversified revenue profile 2. Superior and improving operating efficiencies 3. Comfortable financial risk profile

Weaknesses : 1. Susceptibility of business performance to downturn in the sugar business 2. Exposure to regulatory changes in the sugar industry

Financials : Balrampur Chini Mills Ltd  has posted Net Sales / Revenue   of 4741.30 Cr & Net Profit of 509.30 Cr in FY2020 and expected to post Net Sales / Revenue   of 4995.00 Cr & Net Profit  of 486.90 Cr in FY2021 and Net Sales / Revenue   of 5104.20 Cr & Net Profit of 610.50 Cr in FY2022  and Net Sales / Revenue   of 5450.10 Cr & Net Profit of 712.70 Cr in FY2023.

Valuations  : The Company is now Trading at X 0.70 of its  valuations ( last 4Quaters earnings considered here) with ~30% Discount  and at X0.69 of its FY 2021, which is now almost  ~31%  Discount  to its value and  X 0.55  of its FY 2022 earning with a Discount  of ~45% and X0.47 of its FY2023 earning with ~53 %  Discount to its valuations.

Margin of Safety (1Yr Bond Yield: Value>1 ) is now 2.1 which  makes is attractive as available at almost ~50% Deep Discount.  The  Equity Value Per Share ( Enterprise Value Method ) is  265.80

Whats  best in It   : Balrampur Chini Mills Ltd  is now available at EPS of 14.60(FY2020), which will improve to 35.50 in FY2023, Free Cash Flow will rise to 675.50 Cr in from 595.20Cr during the same period.Book Value per Share will  be 166 in FY2023, which is 108 in FY2020.

If We factor its earnings/valuations, its Price arrives at 562 with consideration FY2023 earnings.

Disclaimer : We are / may going to take exposure shortly.

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The author tracks economic, behavioural and corporate tends, hoping to gauge good avenues of return based on Fundamental Valuations of Stocks, a follower of EPV method. You can reach me/us at | Twitter # NiftyNext1 |  e-Mail : Mail@NiftyNext.Com  |  Tel +91 8802230836  |  Telegram # TheNiftyNext   |


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