Hi Pss, Tulsian earlier made a call on Sakthi when it was 50, see where it is today, I think it is a right call on Ugar, I do not see too much downside either. Safe.
I beleive in what Tulsian has recommended. No doubt this stock is going to cross 35 may be in 45 days time.This is the only sugar stock stock which has not participated in the sector rally. Lets hope for the best and see...
Ugar Sugar has not participated in the run up for a simple reason that for September 2009, the company had posted a net loss. This has been scaring investors and keeping them away. The state with the most advantage in the sugar sector is Karnataka because there you have a recovery of 11.5-12% plus you are not seeing such a hue and cry for the sugarcane price as well.
All the mills, whether it is Ugar or Renuka Sugar are paying a price of about Rs 240-250 for a recovery of 11.5% which translates to an equivalent price with 10% recovery to about Rs 220.
Now this company has recently commissioned a new mill of 2,500 tonne in this season. The old mill at Ugar had a capacity of about 10,000 tcd. If you take any sugar mill in the country, I do not think that anyone will be able to exceed the production what they have done in the previous years because of the overall low production of sugar expected in the country.
However, this company is likely produce about 17 lakh bags of sugar for this season against 15.5 lakh in the previous year.
Apart from that they have 56 megawatt (MW) cogeneration capacity. Even the debt portion of the company is not very stiff. It is at about Rs 130-140 crore which has largely realized to finance the working capital. The December quarter results are likely to be quite good. The company should be able to post a profit after tax (PAT) of about Rs 36-40 crore on an equity of about Rs 11.25 crore, which is at present.
So once the results are out for the December quarter, we all know that even in the March quarter there will be more sweeteners because of the increase in prices and operation of the cogeneration plant. These two quarters can drastically change the view on the stock. I won’t be surprised if this stock reaches about Rs 35 maybe by April end in this year.
A new business forecasting report shows sugar manufacturing is set to be the top growth industry in Australia and India this year, generating more than $3 billion in revenue.
The IbisWorld report predicts the sugar industry will grow faster than the farming, oil and gas and construction industries.
Senior analyst Naren Sivasailam says a combination of rising sugar prices and renewable energy options will see a 15 per cent rise in revenue.
"Brazil is the single largest producer of sugar in the world with India being a close second, and over the last year or so they`ve had poor weather conditions that have drastically reduced supply which has greatly increased prices," he said.
----Posted Wed Jan 20, 2010 9:00am
------------------------------------
Surely this stock is going to touch 30 to 35 in another 30 days.
| NIFTY 
