Buy Dalmia Bharat Sugar, target price Rs 225: ICICI Direct

Buy Dalmia Bharat Sugar, target price Rs 225:  ICICI Direct

ICICI Direct has buy call on Dalmia Bharat Sugar with a target price of Rs 225. The current market price of is Rs 169.

Dalmia Bharat Sugar and Industries Ltd., incorporated in the year 1951, is a Small Cap company (having a market cap of Rs 1367.87 Crore) operating in Sugar sector.

For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 619.56 Crore, down -15.24 % from last quarter Total Income of Rs 730.96 Crore and up 19.15 % from last year same quarter Total Income of Rs 520.00 Crore. Company reported net profit after tax of Rs 37.10 Crore in latest quarter.

Investment Rationale
The brokerage expects the company to witness a revenue & earnings CAGR of 13.0% & 22.8%, respectively. Moreover, Dalmia would be able to generate strong sustainable cash flows. It expects operating cash flow of Rs 331 crore & Rs 355 crore, respectively. It expects debt reduction of ~Rs 570 crore between FY20-23E. It values the stock 5x FY23E earnings with a revised target price of Rs 225 (earlier Rs 200).

Promoter/FII Holdings
Promoters held 74.91 per cent stake in the company as of March 31, 2020, while DIIs held 2.02 per cent and public and others22.68 per cent.

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