@MANU_JINDAL
Good analysis done by you. While the numbers add up - which is evident by increase in recovery, increased cane crushed by 3% and high sugar and ethanol stocks, it is not reflecting in share price - this is only due to poor representation by the company (CFO). Even as per my estimates minimum share price should be Rs. 230 - 250 price in 6 months.
Regarding the recovery-cost calculation:
If cost of cane is Rs. 350 per quintal, if recovery is approx 10% then sugar production is 10 kg and cost of sugar is 35 (350/0.10) and if recovery is 11% - cost of sugar is 31.8 (350/0.11) so 1% improvement in recovery is Rs. 3.2 reduction in cost. In fact if the numbers are calculated more accurately, then the total margin improvement is higher at Rs 1.4 per kg and not Rs. 1 per kg (after improvement in recovery and increase in cane cost to Rs 370).
With higher volume, higher margin will have a multiplier effect.
The MD is very good - explains all numbers in detail and has answers to any questions asked- shows that he is very hands on. This is the biggest comfort for me. In turnaround cases hands of MD / promoter is most important for success. The best decision was to postpone the new ethanol plant. I am sure with his focus on cane development, energy efficiency projects, pharma grade sugar, etc DBOL could replace Dwarikesh as the most efficient sugar company.
But the CFO is surely not doing a good job of good investor presentation - even in the concall he just reads out from the presentation which everybody has already read !! Nevertheless I see this as an opportunity to make money when the numbers improve and stock price appreciates.
PS - there is one more reason for the share price to remain depressed. At the time of split, Dhampur Sugar Mills price was Rs. 300. After 1:1 split, Dhampur Sugar current price is 250 and Dhampur Bio is 150 - put together it is 400. so investors are selling Dhampur Bio and keeping Dhampur Sugar as it is believed to be the better company - which may be true at the time of split but with the new capacities DBOL will be better than Dhampur sugar - they have one more plant (and higher crushing capacity) which means more command area and more sugarcane. Implying that share price should be 250. In times of mkt volatility i think it is a very safe bet.