Multibagger Alert: This small-cap sugar company has surged 268% in the past year!

Multibagger Alert: This small-cap sugar company has surged 268% in the past year!

by 5paisa Research Team Last Updated: 2022-02-10T18:58:50+05:30

The company is expected to improve volumes of ethanol through the B-heavy and sugarcane juice route which will thereby boost revenue and profitability 

Sugar manufacturer, Dwarikesh Sugar Industries has given investors stellar returns of 268.08% over the last year. The share price of the company stood at Rs 27.1 on February 08, 2021, and since then, it has more than tripled investor wealth.

Headquartered in Mumbai, Dwarikesh Sugar Industries engages in the manufacture and refining of sugar from sugarcane. It operates through the following segments: Sugar, Co-generation and Distillery. The company was founded by Gautam Radheshyam Morarka on November 1, 1993.

For the quarter ended December, Dwarikesh Sugar Industries’ revenue grew by 57.78% YoY to Rs 601.35 crore from Rs 381.14 crore in Q3FY21. The company’s gross sugar revenue (including molasses, bagasse and press mud) witnessed a YoY growth of 47.6% to Rs 613 crore, while distillery revenue grew 157% to Rs 67 crore. PBIDT (Ex OI) was reported at Rs 55.06 crore, up by 138% as compared to the year-ago period and the corresponding margin was reported at 9.16%, expanding by 309 basis points YoY. PAT was reported at Rs 28.88 crore, up by 286.37% from Rs 7.47 crore in the same quarter for the previous fiscal year.

Like other sugar companies, Dwarikesh Sugar Industries is expected to be a beneficiary of India’s aggressive Ethanol Blending Programme (EBP), which seeks to achieve the blending of ethanol with gasoline with an aim to reduce pollution, conserve foreign exchange, and increase value addition in the sugar industry. The government has resolved to meet the target of 20% ethanol blending in petrol by 2025.

The company is commissioning a new distillery unit by June of 2022 and management believes that this will enable them to sell 8.3 crore litres of ethanol by FY23E and 11 crore litres by FY24E. On an annualized basis, Dwarikesh Sugar Industries’ will be diverting 25-30% of its sugarcane towards ethanol from FY24 onwards. It is expected that the company will improve volumes of ethanol through the B-heavy and sugarcane juice route and this will boost revenue and profitability – which is thereby driving the stock price of the company.

On Wednesday, the stock of Dwarikesh Sugar Industries closed Rs 100.70, up by 0.95% or Rs 0.95 per share on BSE. The 52-week high of the scrip is recorded at Rs 104 and the 52-week low at Rs 26.10 on the BSE.


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