Dhampur Sugar Mills jumps 2% on expansion of distillery

Dhampur Sugar Mills Ltd jumped 2 percent in the morning trade on June 14, a day after the company said it had completed the expansion of its distillery and commissioned the new capacity.

“The company has completed the expansion of its grain-based distillery capacity of 100 KLPD at its unit located at Dhampur, Distt. Bijnor, Uttar Pradesh. The new capacity has been commissioned on 13th June 2023,” Dhampur Sugar Mills Ltd told NSE. This enhanced capacity would be interchangeable between molasses, syrup and grain, which would allow better utilisation of distillery capacity, it said.

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Recently, brokerage firm Sharekhan gave a target price of Rs 315 for the Dhampur Sugar Mills. The company posted a strong set of numbers for the fourth quarter, with revenue growing 43 percent year on year (YoY) to Rs 759 crore and the EBIDTA margin rising by 100 bps y-o-y to 13.8 percent, resulting in a 2x YoY increase in PAT to Rs. 60.7 crore.

Sugar business’ revenue grew by 44.7 percent YoY, while margin stood flat at 2.6 percent, the brokerage said. The ethanol division’s revenue increased by 68 percent YoY but the margin was down by 704 bps to 18.6 percent.

“With strategies in place such as scaling up of the ethanol business, better productivity in the sugar segment and reducing manufacturing costs, DSML’s revenue and PAT are expected to clock CAGRs of 12 percent and 21 percent, respectively, over FY2023-25E,” Sharekhan said.

“Stock trades at an attractive valuation of 8.8x/7.5x its FY2024E/FY2025E earnings, respectively. We maintain a Buy with a revised PT of Rs 315.”

At 10.30 am, the stock was trading 1.73 percent higher at Rs 273 on NSE.

Stock Performance

Dhampur Sugar Mills stock has given a return of 22.11 percent over the last six months, outperforming the Nifty which has given a return of 0.24 percent over the same period.

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