Buy Dhampur Sugar Mills, target price Rs 692: Sharekhan by BNP Paribas

Sharekhan by BNP Paribas has buy call on Dhampur Sugar Mills with a target price of Rs 692. The current market price of Dhampur Sugar Mills is Rs 539.25.

Dhampur Sugar Mills, incorporated in the year 1933, is a Small Cap company (having a market cap of Rs 3577.96 Crore) operating in Sugar sector.

Dhampur Sugar Mills key Products/Revenue Segments include Sugar, Chemicals, Other Operating Revenue, Power, Others, Molasses, Bagasse, Scrap and Duty Drawback for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company has reported a Consolidated Total Income of Rs 896.00 Crore, up 17.06% from last quarter Total Income of Rs 765.42 Crore and down -17.84% from last year same quarter Total Income of Rs 1090.57 Crore. Company has reported net profit after tax of Rs 76.01 Crore in latest quarter.

Investment Rationale
Dhampur Sugar Mills (DSML) is focusing on creating value for shareholders by strengthening the non-commodities business to achieve consistent earnings growth with higher EBITDA margins. The stock is currently trading at valuation of 10.5x/8.4x its FY2023E/FY2024E EPS, which is at a discount to some of its close peers. Strong earnings visibility, improving margin profile, and strengthening of the balance sheet would help the valuation gap with close peers to reduce in the coming years. Hence, the brokerage is re-initiating coverage on the stock with a Buy recommendation.

Promoter/FII Holdings
Promoters held 49.08 per cent stake in the company as of 31-Dec-2021, while FIIs owned 5.91 per cent, DIIs 0.6 per cent.