Ethanol stocks: Analysts bullish despite weak Q4 results
Ethanol stocks faced declines after weak FY23-24 results. E.I.D.-Parry dropped 1.34% to Rs. 677.25 with a 28.5% QoQ revenue dip. Shree Renuka Sugars fell 2.5% to Rs. 40.42 despite 15% QoQ revenue growth. Dwarikesh Sugar declined 1.11% to Rs. 68.4, with a 20.8% QoQ revenue increase. Analysts remain bullish due to India’s ethanol demand, expected to reach 1,350 crore liters by 2025.
Following are the three ethanol stocks that have witnessed fluctuations in their share prices subsequent to reporting weak FY23-24 financial results.
E.I.D.-Parry (India) Limited
Share price of one of the largest manufacturers of Sugar in India moved down by nearly 2 percent on BSE to hit an intraday low at Rs. 673.15 in the trading session of Thursday, compared to its previous closing price of Rs. 686.45.
With a market capitalisation of Rs. 12,022.4 crore, the shares of E.I.D.-Parry (India) Limited closed in the red at Rs. 677.25, down by 1.34 percent.
The consolidated revenue from operations stood at Rs. 5,557.04 crore in Q4 FY23-24, indicating a decline of 28.5 percent QoQ from Rs. 7,770.14 crore in Q3 FY23-24, and by 19 percent YoY from Rs. 6,860.31 crore in Q4 FY22-23.
E I D-Parry witnessed a rise in the net profit to Rs. 294.3 crore in Q4 FY23-24, increasing from Rs. 216.52 crore in Q3 FY23-24 by 36 percent QoQ, and rising from Rs. 287 crore in Q4 FY22-23 by 2.5 percent YoY.
On a year-on-year basis, the consolidated Earnings Before Interest, Taxes, Depreciation, and Amortisation, or EBITDA decreased from Rs. 620 crore in Q4 FY22-23 to Rs. 582 crore in Q4 FY23-24, a 6.12 percent decline.
The operating performance of the standalone Sugar division was lower during FY23-24 as compared to FY22-23 due to nil exports, higher cane cost, lower recovery from cane and change in product mix in the distillery on account of change in Government Policy.
Incorporated in 1975, E.I.D. – Parry (India) Limited is a significant player in Sugar with interests in promising areas of Nutraceuticals business, along with a presence in Farm Inputs business through its subsidiary, Coromandel International Limited.
Shree Renuka Sugars Limited
Share price of one of India’s largest sugar and green energy (ethanol and renewable power) producers moved down by 2.7 percent on BSE to hit an intraday low at Rs. 40.34 in the trading session of Thursday, compared to its previous closing price of Rs. 41.45.
With a market capitalisation of Rs. 8,603.4 crore, the shares of Shree Renuka Sugars Limited closed in the red at Rs. 40.42, down by 2.5 percent.
The consolidated revenue from operations stood at Rs. 3,466.3 crore in Q4 FY23-24, indicating a growth of 15 percent QoQ from Rs. 3,014 crore in Q3 FY23-24, and by 48.8 percent YoY from Rs. 2,328.5 crore in Q4 FY22-23.
Renuka Sugars witnessed an increase in PAT from a loss of Rs. 171.7 crore in Q3 FY23-24 to a loss of Rs. 111 crore in Q4 FY23-24, whereas, on a year-on-year basis, it decreased from Rs. 44.6 crore in Q3 FY22-23 to a loss of Rs. 111 crore in Q4 FY23-24.
On a year-on-year basis, the reported Earnings Before Interest, Taxes, Depreciation, and Amortisation, or EBITDA fell from Rs. 298.3 crore in Q4 FY22-23 to Rs. 281.7 crore in Q4 FY23-24, a 6 percent decline.
The domestic business was impacted due to lower production and sales volumes on account of drought-induced low cane availability and restrictive policies on Ethanol.
Shree Renuka Sugars Limited is one of the largest sugar and green energy (ethanol and renewable power) producers, a leader in the branded sugar segment and the largest sugar refiner in India.
The company operates in the sugar, ethanol and power segments and has seven integrated sugar mills in the sugar-rich belt of South and West India, and is also the largest mover of sugar in India from its two port-based refineries in India.
Dwarikesh Sugar Industries Limited
Share price of an integrated conglomerate primarily engaged in the manufacture of sugar and allied products moved down by 1.7 percent on BSE to hit an intraday low at Rs. 68 in the trading session of Thursday, compared to its previous closing price of Rs. 69.17.
With a market capitalisation of Rs. 1,267.5 crore, the shares of Dwarikesh Sugar Industries Limited closed in the red at Rs. 68.4, down by 1.11 percent.
The consolidated revenue from operations stood at Rs. 380 crore in Q4 FY23-24, indicating a growth of 20.8 percent QoQ from Rs. 313 crore in Q3 FY23-24, but a decline of 29 percent YoY from Rs. 532.55 crore in Q4 FY22-23, on account of lower volume of sugar sold due to lesser releases.
Dwarikesh Sugar witnessed a rise in the net profit to Rs. 23 crore in Q4 FY23-24, increasing from Rs. 9.81 crore in Q3 FY23-24 by 134.45 percent QoQ, but falling from Rs. 46.75 crore in Q4 FY22-23 by 50.8 percent YoY.
The decrease in PAT was due to lower volume of sugar sales, under-utilization of capacities, higher levy obligation of B heavy molasses resulting in the additional expense of Rs. 19.92 crore and higher provisioning of taxes.
On a year-on-year basis, the reported Earnings Before Interest, Taxes, Depreciation, and Amortisation, or EBITDA decreased from Rs. 88.32 crore in Q4 FY22-23 to Rs. 75.3 crore in Q4 FY23-24, a 14.7 percent decline.
Headquartered in Mumbai, Dwarikesh Sugar Industries Limited, a market leader in the Indian sugar industry, is a multi-faceted, diversified industrial group engaged in the business of manufacturing the finest grains of sugar, and allied products.
Why are analysts bullish?
According to a Niti Aayog report, the demand for ethanol is expected to surge significantly, reaching approximately 1,350 crore liters by 2025 to achieve the 20% blending target. This rising demand presents promising opportunities for ethanol companies in the coming years.
Analysts are optimistic about the growth prospects of the ethanol sector in India, driven by the government’s push for increased ethanol blending with petrol and the target of 20% blending by 2025.
To meet this demand, ethanol production capacity is expanding from the current 890 crore liters to around 1,700 crore liters by 2025. This capacity expansion opens up significant opportunities for investments and new projects in the ethanol industry in upcoming years.
Source Link: https://tradebrains.in/features/ethanol-stocks-analysts-bullish-despite-weak-q4-results/
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