This sugar stock is expanding its distillery units making company operational for 325 days a year
Shares of this sugar company are up by 5.31 per cent in a single trading session.
Today the stock opened at Rs 95 and hit a high of Rs 101. The 52-week high and low of the stock are Rs 148 and Rs 63.55. Currently, the stock is trading at a PE of 11.2 times.
Dwarikesh Sugar Industries Ltd is primarily engaged in the manufacturing of sugar and allied products. It has a strong presence in fields such as sugar manufacturing, power and ethanol/ industrial alcohol production.
DSIL operates sugar capacities of 21,500 tonnes crushed per day (TCD) at its three mills in UP. The operations are forward-integrated into the power and alcohol businesses — co-generation capacity of 91 megawatt (MW) (surplus – 56 MW) and distillery capacity of 162.5 kilo litres per day (KLPD) as on March 31, 2022. DSIL plans to further increase its distillery capacity by 175 KLPD, which will strengthen the company’s operational profile.
In FY2022, the sugar business accounted for around 75 per cent of the company’s revenue, followed by distillery at 13 per cent (increased from 7 per cent in FY2021) and the balance from the co-generation business (12 per cent). The expansion plans of the distillery would increase the contribution of the segment to revenues going forward and moderate the seasonality associated with the sugar business, as distilleries operate for around 325 days a year.
The company has a comfortable capital structure with a gearing of 0.8 times as on March 31, 2022. Reduced borrowings and higher profits resulted in better coverage indicators in FY2022 with a total debt/EBITDA of 1.8 times.
The company's top line is increasing at a CAGR of 22 per cent over the past three years. The total revenue for FY22 is Rs 1974 crore. Sales increased rapidly during the June quarter by 65 per cent YOY and 36 per cent QOQ. In Q1FY23, the company's operating margin was 11.8 per cent. In FY22, capital work in progress accounted for 10 per cent of all assets. The average ROCE and ROE for FY22 are 21 per cent and 24.8 per cent, respectively. The company generated Rs352 crore in operating cash in FY22.