Dwarikesh Sugar Q3 Results Review - Sugar Profits High, But Low Distillery Margins Hurt Earnings: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Dwarikesh Sugar Industries Ltd.’s Q3 FY24 revenue fell 18% YoY to Rs 3.1 billion due to 24%/16% YoY lower sales volumes in sugar/ethanol, respectively. Consequently, revenues in sugar too fell 12% YoY to Rs 3.3 billion (6% below estimate), with distillery seeing a 17% YoY fall to Rs 916 million (18% below estimate). Ebitda tripped 2% YoY to Rs 260 million but was 20% more than our estimate. Ebitda margin expanded ~140 bps YoY to 8.3% (we estimated 7%) due to healthy profitability in the sugar segment. Finance cost decreased by 29% YoY as the company repaid its term loans and under-utilised its cash credit limits. Other income fell by 23% YoY to Rs 60 million, resulting in profit after tax sliding by 7% YoY to Rs 98 million (but 85% more than our estimate of Rs 53 million). PAT margin expanded 39 bps YoY to 3.1%. We have trimmed our FY24E/FY25E Ebitda by 5%/1% to factor in the lower profitability in ethanol, given the higher levy obligation for country liquor and likely lower production of juice and B-Heavy-based ethanol. We have cut our EPS by 6%/1% for FY24/FY25E. We roll forward valuations to FY26E. Our SOTP-based target price of Rs 110 (Rs 112 earlier) implies 10 times FY26E price/earnings and seven times FY26E enterprise value/Ebitda. We have assigned an FY26E EV/Ebit of 10 times to distillery, seven times to sugar and four times to the power co-generation business; reiterating 'Buy' on Dwarikesh Sugar. Key risks: Lower-than-expected,recovery rate, anddomestic sugar prices..Click on the attachment to read the full report:.Titan Q3 Results Review - Broad-Based Growth; A Miss On Margins: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Dwarikesh Sugar Q3 Results Review - Sugar Profits High, But Low Distillery Margins Hurt Earnings: Systematix

Dwarikesh Sugar achieved healthy margin expansion as profitability in the sugar segment improved on higher realisations.

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