Is it dhampure or dhampur creates confusion.
Autolite JV is with Dhampure chem which is different from Dhampur sugar. FYI
It is reassuing to see ur post after a long time. Good analysys. keep it up.
Can anyone help me out with Oudh Sugar…I know the trading has been stopped. Just wanted to know what will happen who has shared of Oudh Sugar
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Even i am looking for some info on oudh sugar. If anyone can share some infor it will be really helpful
Oudh Sugar & Upper Ganges have undergone scheme of arrangements approved by NCLT.
http://www.birla-sugar.com/Stock-Exchange-Filings-/Oudh-Composite-Scheme-of-Arrangement
So Oudh would be breaken into 3-4 companies details of which you can see on the above link.
According to scheme of arrangements your DP would have been deposited with the Respective equities.
Their listing is due SEBI approval , which when i last enquired is under process , they do not know the timelines yet.
Trading will restart in new equities post Re-listing .
UP sugar story keeps getting better
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Quote from Article - **He is bullish on shares of Dwarikesh and Dhampur sugar and expects them to double from current levels."
Read more at:
Sugar prices are down 7% this week. The mills have been asked to curtail prices & increase supplies. - cnbctv18 reports
check Manisha Gupta’s report around 12PM https://www.facebook.com/cnbctv18india/
Interesting news on precarious state of sugar stockpile in India. This will mandate imports to happen thus bringing the prices down? Remember, Diwali is in October this year.
"Looking to an available stock of 23 lakh tonnes of Sugar, as at 30-9-17, can just about meet the consumption for the month of October17 only; this month is likely to see higher consumption of Sugar as Diwali, the biggest season for sugar consumption falls on 19th October this time".
Lesser supply and higher demand need to push prices higher.
But global sugar price is low compared to india and hence import should bring down the price.
But since import duty is hiked from 40% to 50% recently in order to nullify the effect of cheaper global sugar price, the govt’s idea is to keep local sugar price firm and not to decline from current level. This will help mills which in turn helps farmers to get their outstanding payment from mills. Though the move could be against consumers, its good for mills and farmers.
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Yup… Even this article talks about the same stuff. Govt intends to keep the prices around 40 levels in order to keep the supply chain healthy. Noteworthy - “If an import is made now, refined sugar will cost Rs 27/kg without any duty. After provisioning for the margins of wholesale and retail, the consumer need not pay more than Rs 32/kg for imported sugar (at zero duty).”
Interesting article on North vs South Sugar Mills
I can’t find any news but most of sugar stocks are hitting upper circuit today, that too on a relatively flat market.
Hi,
I am new to the forum , so forgive me if my post is not upto the mark. Uttar Pradesh Sugar sector seems to be entering an interesting time . Reasons are
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SAP for Sugar Year 2018 has been increased by only 10 Rupees/Quintal . According to SP Tulsian, mills had to be pay 6 Rs as purchase Tax which has now been absorbed into GST. So, the effective rise is ONLY 4 Rs. On the other hand , major mills like Dhampur, Dwarikesh and Balrampur are giving a forecast of 20 % rise in sugar production along with improvement in recoveries, which means we can expect upto 25-30 % rise in the sugar production for these companies. This also means more power production, more ethanol production and higher capacity utilization.
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The price of ethanol has been hiked by 5 percent to 41 Rupees/litre and the GST along with transportation cost will be borne by OMC’s. This should augur well for companies with high ethanol capacity like Dhampur , Balrampur & Triveni. Moreover, looking at the rise in crude prices & India’s aggressive ethanol blending targets, the ethanol price should go north wards starting next year. Higher availability of molasses because of higher sugarcane production in the 17-18 season will make ethanol cheaper to produce.
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India’s sugar production for next year has been forecasted at 25 million tonnes (we all know how reliable ISMA’s forecasts are ) against a consumption of 25-25.3 million tonnes. This means sugar prices will mostly remain stable (affirmed by managements of major sugar mills in their interviews) and Sugar season 2018-2019 will start with an even lower opening stock than this year.The government will not want to import any sugar going forward unless extremely necessary as we have general elections in 2019. This augurs well for profitability
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The best-run sugar mills have started reducing their debt big time. Dwarikesh will be debt free by end of this fiscal and Dhampur will par down it’s debt by another 200 crores as indicated by the management in the previous conf call. This means lower interest costs going forward which should augur well for the bottom line. Infact, credit ratings for both companies have been upgraded by rating agencies in the previous quarter.
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Companies like Dhampur & Avadh sugar have come out with stellar Q2 results. Dwarikesh too is expected to do the same.
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Owing to rising crude prices, mills in Brazil have already started diverting more cane to ethanol which means lower sugar production and higher prices. If this trend continues, exports for India can become a viable option in Sugar Season 2018-2019 when a bumper crop is forecasted.
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Ace investors like Anil Kumar Goel, Dolly Khanna and Daljeet Kohli have increased their stake in both Dhampur and Dwarikesh in the previous quarter . Also, in an otherwise heated market, these companies are available at a PE of 6 - 7.5. Is a rerating on the cards ?
Risks
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If the UP government drastically increases the SAP for sugar season 2018-2019 keeping in mind the 2019 general elections, it would really hurt these companies.
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Market refuses to believe in the diminishing cyclicality of the sugar sector and refuses to give a higher PE.
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Bumper production in Sugar year 2018-2019 would bring down the sugar prices. Combined with a higher SAP, this could spell disaster for the sugar mills.
Disclosure : Heavily invested in Dhampur Sugar.
Comments welcome.
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@aarshkshah1992
Thanks for informative post. I am also having a feeling that sugar mills in North will perform good in next two quarters.
Are you sure Dwarikesh has plans to payoff all its debt by end of this fiscal? I still see very high interest rates in its quarterly results.
Dhampur is a good company and in sugar sector I also like Andhra Sugar. However, I think some of these companies have already given good returns over last 12 months. And, Dhampur has massive debt (same is situation of many other companies in the sector).
I invested last year in Rana Sugars (a company with bad management) at Rs 6 and the stock jumped but now almost near my investment level. I had invested considering that the company will turnaround with better sugar pricing. However, the company management always surprises (negatively) with its results.
I have a query about Rana Sugars which seems to me deliberate attempt of management to declare bad results. They keep massive inventory (even much higher than the company’s market value). I have seen inventory buildup in other sugar companies as well but Rana Sugar has possibly the worst ratios.
I will soon exit the stock if I don’t see better results. Possibly will shift to some other company in sugar sector.
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Very informative post, a query on Triveni, in terms of comparing Triveni and Dwarikesh which one seems to be a better valued stock in all parameters, I currently hold Triveni and looking to switch to a better player if its worth the effort and returns.
Record sugar output seen