EMPEE SUGAR & CHEMICALS
 
  

 
 

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SHARETIPSINFO >>Research Reports >> EMPEE SUGAR & CHEMICALS LTD. (04-03-2009)

 

LISTING
CMP
Rs 07
52 WEEK HIGH/LOW

Rs 5.7/Rs 13.5

FACE VALUE

Rs 10

AVERAGE VOLUME

2200

COMPANY OVERVIEW:
The Company originally was incorporated on 24th November, 1988 as a Private Limited Company under the name and style of Raghava Sugars (P) Ltd. The name of the company was changed from Raghava Sugars Private Limited to Empee Sugars & Chemicals Limited at the time of conversion as a Public Limited Company on 3rdMay, 1990.
The company operates sugar mill in the state of Andhra Pradesh. The sugar unit has a capacity of 2500 TCD per day and can crush up to 3500 TCD.
The sugar mill has also tied up cane area of over 15000 acres.
An Industrial Alcohol Plant with a capacity of 300000 liters per day was established with a capacity to turn out 20000 liters of Extra Neutral Alcohol. This is also being upgraded to produce 60000 liters per day.
The Bio Fertilizer plant attached to alcohol plant caters to the needs of the cane grower.

PRODUCT MIX:


PRODUCT

SALES

% OF TOTAL

1.SUGAR

43.42 CRORE

66.79%

2.ENA SPIRIT

19.33 CRORE

29.73%

3.OTHER SALES

2.25 CRORE

3.46%

SECTORAL OUTLOOK:
The average domestic sugar price for the quarter ended on December 2008 increased by 35% YOY to Rs18.5 per kg. The sugar price in international market is currently $325 million tones or Rs16.5 per kg (fob). We assumed 28% decline in 2009 sugar production 19 million tones which is lower than the industry estimate of 20 million tones. The decline is expected to be steep in Maharashtra and Tamil Nadu with decline of 36% and 28% respectively in 2009. The production in UP is expected to decline by 19%in 2009.

 

TERND IN SUGAR PRICE:

INVESTMENT LOGIC:
UPTREND IN SUGAR PRICE.


RELAXATION IN RAW SUAGR IMPORT WILL BENEFIT COMPANIES OPERATING IN COASTAL AREA.
COMPANY IS TARDING AT 6 YEARS LOW. SUBSTANTIAL UPSIDE AS THE COMPANY STARTS EARNING GOOD PROFIT.

SHAREHOLDING PATTERN:

 

 

 

NO.OF SHARES

% TOTAL

PROMOTER

29607314

 

70.54%

INSTITUTION

0

 

 

GENERAL PUBLIC

12365586

 

29.46%

GRAND TOTAL

41972900

 

100%

FINANCIAL:

 

 

31/03/05

31/03/06

31/03/07

31/03/08

TOTAL INCOME

87.13

99.39

61.16

60.05

EXPENDITURE

-75.37

-83.49

-55

-51.17

OPERATING INCOME

11.76

15.9

6.16

8.88

DEPRECIATION

-2.59

-2.09

-2.11

-2.71

PBIT

 

9.17

13.81

4.05

6.17

INTEREST

 

-4.45

-2.74

-3.47

-5.74

PBT

 

4.72

11.07

0.58

0.43

TAX

 

0.38

-1.48

0.33

0.86

PAT

 

5.1

9.59

0.91

1.29

 

CHANGE IN TOTAL INCOME, OPERATING PROFIT AND NET PROFIT:

KEY HIGHLIGHTS:
TOTAL INCOME PEAKED IN 2006 TO Rs99.39 CRORE WHEN SUGAR CYCLE WAS AT ITS CLIMAX.
OPERATING PROFIT IN 2006 WAS Rs 15.9 CRORE,WHEN SUGAR CYCLE WAS AT ITS CLIMAX.
NET PROFIT IN 2006 WAS AT Rs 9.59 CRORE.

RATIOS:

 

 

31/03/05

31/03/06

31/03/07

31/03/08

 

EPS

1.214286

2.283333

0.216667

0.307143

 

OPM

13.49707

15.99759

10.07194

14.78768

 

NPM

5.853323

9.648858

1.487901

2.14821

INTEREST COVER

2.060674

5.040146

1.167147

1.074913

KEY HIGHLIGHTS:
RATIOS ALSO SHOWED A UPWARD TREND WHEN SUGAR CYCLE WAS ON UPWARD MARCH. THE CYCLE PEAKED IN 2006, EPS, OPM, NPM AND INTEREST COVERAGE SHOWED INCREASING TENDENCY. AFTER 2006 WHEN CYCLE MOVED INTO BEAR PHASE ALL THE ABOVE RATIO SHOWED THE DECLINE.


COMPARISION OF Q3 2009 WITH Q3 2008:

 

 

31/12/07

 

31/12/08

TOTAL INCOME

8.63

5%

9.07

EXPENDITURE

-9.08

 

-8.43

OPERATING INCOME

-0.45

242%

0.64

DEPRECIATION

-0.97

 

-0.82

PBIT

 

-1.42

 

-0.18

INTEREST

 

-1.78

 

-1.76

PBT

 

-3.2

 

-1.94

TAX

 

2.49

 

1.35

PAT

 

-0.71

17%

-0.59

KEY HIGHLIGHTS:
TOTAL INCOME INCREASED BY 5%.
OPERATING INCOME INCREASED BY 242%.
NET PROFIT INCREASED BY 17%.
VALUATION & OUTLOOK: At CMP it is trading at 2.3X to 2010E earning. We expect the sugar company to trade at 7x to 2010E earning in 2010. This gives the fair price to be somewhere near Rs21.
The outlook of the company has improved due to the change in the sugar sector scenario. Sugar price are expected to keep northward march.


CONCLUSION:
Investor with one year investment horizon could take exposure on this counter. The stock is trading at 5 years low. The downside is very  limited.
     

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