Balrampur Chini gains 5% post Q4 results, share buyback announcement

The company announced a buyback of 10 million shares at Rs 180 per share via tender offer

Shares of Balrampur Chini Mills climbed 5 per cent to Rs 141.70 on the BSE on Wednesday after the company posted a 31.1 per cent year-on-year (YoY) growth in revenue to Rs 1,740 crore in March quarter (Q4FY20) results, led by aggressive exports in the current season.

The company's operating profit declined 6.6 per cent y-o-y to Rs 241 crore, largely impacted by decline in power revenues. Net profit declined 14.8 per cent at Rs 230 crore, impacted by lower taxation in base quarter.

The management said the sugar segment delivered a healthy performance on the back of higher volumes and steady realizations. The distillery segment delivered robust performance on account of higher volumes and better realizations.

The company also announced a buyback of 10 million shares at Rs 180 per share via tender offer. The board has fixed July 3, 2020 as the record date for determining the entitlement who will be eligible to participate in the buyback.

The sugar industry has seen stable earnings with the minimum selling price (MSP) in place. Moreover, the industry has been able to liquidate huge sugar inventory through export incentives & diversion towards B heavy ethanol.

Analysts at ICICI Securities believe that Balrampur Chini is best placed in the sector given lower requirement of working capital debt, optimum distillery and power capacities to utilise all its molasses & bagasses. The company generated Rs 850 crore of operating cash flows in FY20.

“We believe continuance of export incentives & expected hike in MSP would further improve earnings & cash flow for the company. The Covid-19 impact on sugar industry is minimal with around 1 MT of lower consumption,” the brokerage firm said in result update and said it remains positive on the stock.

At 09:48 am, Balrampur Chini Mills was trading 2 per cent higher at Rs 137.70 on the BSE, as compared to 0.51 per cent rise in the S&P BSE Sensex. Around 1.6 million equity shares have changed hands on the counter on the NSE and BSE so far.