Dha­rani Sug­ars & Chem­i­cals Ltd

Money Times - - Techno Funda - By Nayan Pa­tel

(BSE Code: 507442) (CMP: Rs.40.60) (FV: Rs.10)

In­cor­po­rated in 1987, Chen­nai-based Dha­rani Sugar s & Chem­i­cals Ltd (DSCL) man­u­fac­tures and sells white sugar. It also pro­duces mo­lasses and other by-prod­ucts. In ad­di­tion, it is in­volved in the gen­er­a­tion of elec­tric­ity; and pro­duc­tion of in­dus­trial al­co­hol in­clud­ing ethanol. It has three in­te­grated sugar plants with a to­tal crush­ing ca­pac­ity of 10,000 TCD, a 37 MW co-gen­er­a­tion power plant and a multi-prod­uct dis­tillery of 160 KLPD. With an eq­uity cap­i­tal of Rs.33.2 crore and re­serves of Rs.141.18 crore, DSCL’s share book value works out to Rs.52.53. The stock trades at P/BV of around 0.77x. The pro­mot­ers hold 61.55% of the eq­uity cap­i­tal, which leaves 38.45% stake with the in­vest­ing pub­lic.

For Q1FY18, DSCL re­ported a net profit of Rs.1.08 crore against a loss of Rs.9.16 crore on 83% higher sales of Rs.153.43 crore fetch­ing an EPS of Re.0.33. Af­ter re­port­ing losses con­sis­tently for four years, DSCL re­ported prof­its in the last two quar­ters and we ex­pect this trend to con­tinue in the com­ing quar­ters as well. It has re­duced debt by al­most Rs.50 crore in FY17. Tech­ni­cally, the stock has given a strong up­ward break­out with vol­umes. In­vestors can buy this stock with a strict stop loss of Rs.32.5. On the up­per side, it could zoom to Rs.48-51 lev­els in the short-term and fur­ther to Rs.60 in the medium-term.

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