Thread by @LnprCapital

Balrampur Chini Mills Analysis !!
#Balrampurchini

A detailed #Thread below 🪡🧵
#StockMarket #Investing

About -

Balrampur Chini Mills got founded in 1975, is one of the largest sugar manufacturing company in India. It's one of the first sugar companies in the country to diversify its business from sugar to distillery & cogeneration.

With deep & profound sectorial understanding their innovative approach to manufacturing has enabled them to successfully create a wide range of by-products ranging from Molasses, Alcohol, Ethanol & Bagasse to Power Generation.

By~products -

It is an integral part of sugar industry a substantial part of earning contribution comes from selling by-products, thereby de-risking the overall
business. Greater the level of integration better the ability of de-risk the business from cycles.

Financial Summary -
Q3 FY22 (YoY)

Revenue were at ₹ 1212 Cr. ⬆️13%
EBITDA at ₹ 100 Cr. ⬆️174%
PAT at ₹ 71 Cr. ⬆️218%
EPS at ₹ 3.5 ⬆️225%

Product Offerings -

▪️Sugar: BCML is among the leading sugar manufacturers in India with a crushing capacity of 76,500 tonnes of cane per day across 10 plants.

▪️Ethanol & Alcohol: Ethanol is a green fuel produced by the Company which is blended with petrol for use in vehicles. All its Ethanol producing units are running on Zero Liquid Discharge technology. Molasses which is a by-product is used for producing Ethanol & Alcohol.

▪️Bagasse: Bagasse is the fibrous matter that remains after sugarcane stalks are crushed to extract their juice and is used as a biofuel. It is also supplied to paper industries for manufacture of eco-friendly paper and is also used in making sustainable disposable food ware.

▪️Power: BCML produces green power as it uses its waste product (bagasse) as raw material instead of using fossil fuels which is harmful for the environment. The Company has a cogeneration capacity of 278.47 MW.

▪️Agri-Inputs: BCML converts left over ash waste from incineration boilers to Bio-potash granules, which is an essential fertiliser. They also churns out Pressmud which is rich source of organic manure. These, with Bio-agents produced for soil health, promote chemical 🆓 farming.

Key Triggers -

• They completed the expansion of its Gularia distillery from 160 KLPD to 200 KLPD. The greenfield/brownfield expansion
programmes for distillery at Maizapur & Balrampur are on track, expected to commence production at the expanded capacity from
Nov 2022.

• In a massive boost to ethanol producers, the Govt. in June 2021 advanced the 20% Ethanol blending target to 2025. The
shift towards ethanol production is likely to act as a superlative substitute for mitigating the effects of glut like scenario in domestic sugar market.

• India’s dependence over the fuel imports is likely to get curbed to a certain extent
with ethanol blending. Thus, there can be a turnaround in Sugar Sector from being a cyclical to structural growth sector & a clean energy contributor.

• BCML has generated positive operating cash flows over the last 8 out of 10 yrs despite the highly cyclical nature of the business given
its prudent business management & operational efficiencies. The company has planned a capex of ₹1000 Cr over the next 2yrs.

Risks -

• Any regulatory changes in the sugar industry.

• Slowdown in sugar industry can impact the business growth.

• Climatic vagaries could
impact cane availability,
quality.

• Weakness in any one of the
segments of the Company’s
presence could affect
prospects.

Conclusion -

BCML with increase in distillery capacities, likely to achieve 1050 KLPD by Dec 2022,
will be the largest ethanol producer in Uttar Pradesh, can provide solid revenue visibility while higher margins could aid the profitability
growth.

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