Dhampur Sugar net profits decline 26% to Rs 17 crore in March 2013 quarter

MUMBAI: A lower sugar sales volume led Dhampur Sugar to post a lacklustre result in March 2013 quarter. The company has built up a significant sugar inventory in anticipation of higher sugar prices in future.

In the quarter ending March 2013, Dhampur Sugar's net profits declined 26% to Rs 17 crore. The company sold only 48,000 tonnes of sugar during the quarter and is holding inventory of nearly 3 lakh tonnes in anticipation of higher sugar prices in the coming months. The company is expected to post an improved earnings due to increase in sugar prices since the end of March quarter. Sugar prices have gained by nearly Rs 1.5 kg to Rs 35 per kg since March 31, 2013.

In addition, Dhampur Sugar stands to benefit from mandatory blending of 5% with petrol. The company has tendered to supply nearly 3.5 crore litre of ethanol in FY14 at Rs 35 per litre. This is more than 20% higher than the average realisation of Rs 27 per litre received by sugar mills in the past.

At current market price of Rs 43, the stock is trading at a price-to-book value of 0.46.