Sugar Cycles: 7-8 years of losses followed by 2-3 years of super gains!


(Aditya Mehta) #1170

Dwarikesh sugar Q3 concall might give u some clarity.


(Mridul) #1171

Dcm mgmt said sugar should recover from mid feb as crushing season comes to end in Maharashtra and gujarat. Though, risk reward isn’t favourable now.


(jajushobhit) #1172

I can’t find the Dwarikesh Concall transcript. Can you please share if you have it.

Regards
SJ


(Aditya Mehta) #1173

Audio transcript is available at researchbytes.com


(jajushobhit) #1174

I tried that but there seem to be some issue with the link.


(Aditya Mehta) #1175

Link to dwarikesh sugar Q3 concall
https://www.researchbytes.com/webcast.aspx?WID=140691


(sougataG) #1176

DWAR SUGAR : Earnings Call Transcript
http://dwarikesh.com/pdf/2018/Transcript-Q3-2018-earnings-call.pdf


(phreak) #1178

(Aditya Mehta) #1179

Balrampur Chini to buy back 2.81% equity shares: https://www.thehindubusinessline.com/markets/stock-markets/balrampur-chini-to-buy-back-281-equity-shares/article22816054.ece


(sougataG) #1180

http://indiansugar.in/


(nikhil pai) #1181

Does anyone have a view on this…as a retail shareholder should I participate?


(vpwadhwa) #1182

Companies that do buybacks are wealth generators in the long term. You could participate but if the acceptance ratio is very small, it wont be worth the effort. Ideally this could be bought for a 2-3 year view.


(duranvskp) #1183

What is the view on sugar sector now, the sector as a whole is in downtrend currently. Is it prudent to play on the cyclical theme that it is going to make a turn around from here.


(Mehnazfatima) #1184

Sugar up cycle ends with the production estimated at 27 million tons against a consumption of 25 million tons.

Next year the monsoon is expected to be normal monsoon…Hence the sugar production for the next sugar season maybe around 29 million tons.

We may now have to wait for 2022/23 for the next up cycle. Till then, sugar companies stocks will be in a down trend.

Some stocks like Dhampur are showing signs of rallying in March / April…I expect massive distribution to take place in sugar stocks in the next few months.

In the coming sugar down cycle, highly debt laden companies like Bajaj Hind may finally collapse…As they were not able to strengthen their balance sheet in this up cycle. While others sugar stocks such as balrampur, Dhampur, dwarikesh have become almost debt free and can survive the next few 4-5years of losses quite well…

Can’t say the same about Simbhaoli and Bajaj Hind…And Renuka

http://www.livemint.com/Politics/yBSn9R78SiEW1hgyaeDvzM/Indias-sugar-output-expected-to-rise-to-record-292-million.html,


(Mehnazfatima) #1185

This is when the upcycle started

And it lasted for two years. Now brace for 3- 5 years long downcycle


(duranvskp) #1186

@Mehnazfatima Thank you so much for your response and for the information shared.

Some one please help me understand the rationale behind investments made by Anil Kumar Goel, Seema Goel, Dolly Khanna. I would like to comprehend what value are they seeing in such a sector which is undergoing through such a downward business cycle. As recent as a fortnight ago Mr Anil Kumar Goel made a bulk deal in Avadh Sugar.

This is particularly unfathomable to me since day in day out both media and ISMA are bombarding us with negative news that Sugar production is going to increase leaps and bounds for this year and as well as next year. Consequentially the sugar price is dropping continuously based on this information where supply is going to outstrip demand.

Anyone who can throw some light on this conundrum and come up with a reasoning and investment rationale kindly respond. To put it succinctly what is that these marquee investors are seeing that we are not seeing?

Thank you in anticipation.


(Aditya Mehta) #1187

@duranvskp Sugar sector has also become more of a political agenda. Fy19 Being election year govt cannot ignore the pile up of payments to farmers.
And the way actions are being taken till now it seems that they will be able to export 1-1.5million Tonnes of sugar easily out of the country. Moreover it will be a long term contract to export sugar to Bangladesh and Sri Lanka.
Although there is fear among traders and stockist but if things go as per plan, then there can be re-rating of sugar sector.
CONTRA-PLAY!!!


(vpwadhwa) #1188

Very nice analysis, Aditya. Maybe Balrampur and other strong sugar players are great buys now for a one year view (pre May 2019).


(Aditya Mehta) #1189

Bad News
Even exports will not help in jacking up of prices
as there will be surplus of about 3-4 million tonnes.


(Mehnazfatima) #1190

Commodity and Cyclical Plays

Jiten Parmar plays the cyclicals very well. It would pay to listen to what he says.

Incidentally, i too think that copper is due for upcycle