(Reuters) – India’s Dalmia Bharat Sugar and Industries reported a 48.8% decline in second-quarter profit on Monday, hurt by higher inventory costs due to a sugar export ban, which weighed on its margins.
The company, which supplies sugar to companies like Coca-Cola, Britannia, Dabur, said its consolidated profit before tax fell to 378.9 million rupees ($4.5 million) for the quarter ended Sept. 30, from 740.2 million rupees year ago.
Total expenses rose 26.8%, led by near-37% jump in inventory costs. This resulted in its margins contracting to 7% from 9% a year earlier.
However, revenue from operations rose 26.6% to 9.26 billion rupees.
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KEY CONTEXT
India, the world’s largest sugar consumer and second-biggest producer, banned mills from exporting the sweetener during the 2023/24 season. Since then, domestic sugar companies have been grappling with increased inventory costs as stocks pile up.
The government plans to extend the export ban for a second straight year amid prospects of lower sugar cane output, Reuters reported last month.
PEER COMPARISON
Valuation Estimates (next Analysts’ sentiment
(next 12 12 months)
months)
RIC PE EV/EBI Revenue Profit Mean No of Stock to Div
TDA growth growth rating* analysts price yield
target** (%)
Dalmia Bharat Sugar 11.56 8.40 15.70 10.97 Hold 1 0.65 1.13
and Industries
E I D-Parry (India) 10.96 4.29 10.77 NULL Strong 1 0.80 1.05
Buy
Dwarikesh Sugar 10.10 6.97 4.47 24.90 Buy 2 0.76 –
Industries
Balrampur Chini Mills 19.87 15.25 10.47 7.88 Buy 4 1.06 0.49
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG IBES
— $1 = 84.0480 Indian rupees
(Reporting by Ashish Chandra in Bengaluru; Editing by Sonia Cheema)
