In a special edition of Jain Saab Ke Gems, Zee Business analyst and the market expert Sandeep Jain in a conversation with Managing Editor Anil Singhvi lists out the reason why Dalmia Bharat Sugar and Industries would give bumper returns going forward and what makes him confident on the stock.

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Geographical presence, integrated operations, fastest-growing sugar company, and ethanol blending news are the key factors that makes market expert bullish on the stock. He further decodes each of the factors for a better understanding of why Dalmia Bharat Sugar is a perfect Buy.

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Terming it as a spectacular company, Jain says. "Dalmia Bharat Sugar is the only company to have a presence in Uttar Pradesh and Maharashtra, the two of the largest states in India. The company gets huge benefits due to geographical reasons, moreover, its operations are integrated," he said.

The government’s support to the industry be it through a sugarcane FRP (fair and remunerative price) or ethanol blending, makes sugar both a political and national commodity of the country, says Jain further stating that ethanol blending story is a game-changer and driving the whole sugar sector.

The government earlier in June has advanced its target of blending ethanol with petrol by 20 per cent by two years. At present, 7.5-8 per cent blending is done, Commerce and Industry Minister Piyush Goyal said in a briefing while announcing cabinet decisions on Wednesday.

The analyst, who had recommended other stocks from this space, says, there has been a structural change in the sugar industry due to 20 per cent ethanol blending with petrol target advancement.

Dalmia Bharat Sugar, lately, has been corrected by around 20 per cent from Rs 570 per share levels amid the unfavourable market's sentiment for mid-cap and small-cap indices, says the market expert. 

The company has been doing splendid in its quarterly results and consistently making money each quarter, as for the straight four quarters it has reported over Rs 100 crore profit, says Jain, mentioning that the stock is available on PE 12x.

He adds, the sugar company’s last three years profit CAGR (Compound Annual Growth Rate) is at 30 per cent, while five years profit CAGR is at 40 per cent, similarly, its five years sales CAGR is around 18-20 per cent.

Stating that Dalmia Bharat Sugar is a well-managed company than its peers, Jain being confident in the company says, around 75 per cent shareholding is with promoters while FIIs (Foreign Institutional Investors) hold over 1 per cent stake, and even some ace retail investors hold over 1 per cent stake.

Citing all the positives of the company, Sandeep Jain says, Dalmia Bharat Sugar is a good buy and sets the first target of Rs 530 per share and the second target of Rs 570 per share, which he expects to be achieved in the next 6-9 months.