Balrampur Chini Mills

Balrampur Chini Mills’ ex-factory sugar realisations have increased by around 25 per cent sequentially for the December 2009 quarter to Rs 32 per kg; average realisation for December month is higher at Rs 34 per kg. In the first week of January 2010, sugar realisations have spiked further and are currently at around Rs 38 per kg. With the overall sugar scenario likely to remain tight, prices in India and hence the realisations of sugar producers are likely to remain firm.

Balrampur is expected to report a hefty profit growth in the December 2009 quarter on the back of an 80 per cent year-on-year increase in sugar realisations and gains from the sale of lowcost sugar inventory. Thus, despite 44 per cent lower sugar sales volumes, net profit is likely to jump 67 per cent to Rs 85.5 crore. At Rs 141, the stock trades at 10.6 times and 10.2 times its 2009-10 (September year ending) and 2010-11 estimated earnings, respectively. The increase in sugar prices leaves scope for further up gradation of its estimates.