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Friday, December 5, 2008

Balrampur Chini - BUY Report from Centrum Brokerage

MUMBAI: Centrum Broking has maintained a "buy" rating on Balrampur Chini Mills.

Centrum Broking has maintained a "buy" rating on Balrampur Chini Mills with a target price of Rs 54.

The company reported better-than-expected Q4FY08 quarter results with net profit at Rs146 million against Centrum’s estimate of net loss of Rs137 million owing to better operating margin mainly due to the huge spikes in sugar prices during the last month of the quarter.

On an annual basis, sales rose 5.5 percent YoY (8.3 percent lower than our estimate). EBITDA margin was up 1,466bp YoY to 21.5 percent (our estimate: 18.1 percent) mainly due to lower sugarcane prices and higher sugar prices YoY. Net profit rose to Rs 969 million (our estimate: Rs724 million) for FY08.

Centrum is lowering its earnings estimates by 13.4 percent for FY09 and 17.8 percent for FY10 on the expected decline in sugarcane availability, earlier than anticipated, the brokerage has said.

The stock price of Balrampur Chini: Rs 33.25 (as on 5th dEC. 2008)

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