Sakthi Sugars came out with mind blowing results but the stock doesn`t seems to be moving. Does anyone has any clue on why this is happening? Am I missing something here????
High debt is a matter of concern. But this is the case for almost all the companies in the sector. Further stock is in T to T segment for a long time and thus liquidity is also a concern.
Company has managed to restructure the debt. FCCBs are also getting converted into shares at a premium. I feel, this is the right opportunity to accumulate the stock under this cicumstances.
At the operational level, company is performing well. Results have been excellent even without much profitability from sugar space. Company enjoys the locational advantage and access to sugarcane for a longer time as compared to north Indian mills. Shree Renuka Sugar has also holding in the company.
There seems to be some selling pressure at current levels. Once it is absorbed, it may surprise on the upside.
In that case I guess Dhampur Sugar is a better bet since it has outperformed Sakthi Sugar considerably even though it`s located in the volatile North Indian belt!
I think sakthi wl give better returns than Dhampur bcs it pays less for cane compared to Dhampur.PE ratio is also better than dhampur.Anyway all sugar stocks r good 4 next two years as all wl outperform sensex and nifty.
Good to see you here as well.
I agree that sakthi has a better PE ratio and EPS etc. But looking at the way it is under-performing in spite of the stupendous result, I think there is something in the stock which we don`t know otherwise there is no reason for this stock to under-perform so much!!!
May b bcs it has so many subsiadaries.One such sub applied 4 bankrupcy in Germany few months back.Otherwise it is an excelent sugar co.Let us wait.Even dhampur was struggling at 20 25. Who knows in coming days it may outperform even dhampur.Ihv 5000 dham at 40 and 4000 sakthi at 35 average.Now everyday i m accumulating sakthi in small qnts.
As you said, Sakthi had some problems with its subsidiaries. It is also carrying an interest cost of 19crs which it has not booked in this quarter`s result.Maybe that is why it is not performing now. However it should start running by Dec end. I am holding Sakthi, Rajshree and Dhampur. All these have raw refining capacity and various other side stories going for them. Rajshree has 80000 tonnes of inventory and gets its cane for cheap.Dhampur has contracted a lot of raw at attractive prices and will sell power at new higher rates.It has already sold a part of its raw shipment at a good margin and has enough left over to run its boilers till April. Most importantly, these being small cap stocks with large debt were neglected by the market and have a lot of catch up to do.
Ok! So one of its subsidiary filed for bankruptcy. Guess this is the reason why the stock is under-performing, apart from high debt it must be reeling under.
I used to hold Sakthi but moved to Dhampur when it didn`t move much. I hold around 3000 Dhampur@Rs55I missed buying a substantial quantity, by a whisker, in my attempt to save a few paisas, when I got into the typical retail mentality when it was trading around Rs 20/-. Anyways, now I have learned my lesson. :)
I dnt think management is not good.Normally south Indians r better managers bcs unlike northis they dnt fudge accounts and r v v conservative in expanding at high speed.Just wait south cos rises last and so wl b sakthi.
P/E ratio for sakthi is 55 compared to dhampur`s only 12 and the industry average is 22. This shows why sakthi stocks are seriouely overvalued and thus there is no reason for them to move up if these numbers are correct. Any body knows why this p/e ratio is so high even after great recent earnings!!!!
Dear cicero, if u know amonth back, sakthi`s pe ratio was -ve, now u can see it at 54, just see last year same quarter profit was loss of 92 crores, just wait for this quarter result, eps will jump too about 40-50 rs. and suddenly it will be available at just 2-2.3 p/e..
so.. think long term...then only u wil profit,oderwise u;l keep on thinking valuations, and dont know when it will be moving up in circuits and u wil not get chance to buy at all..
Am not sure why it`s showing the P/E as 55 as in quarter ending June the EPS was Rs 11.61 and in last quarter the EPS was Rs 13.81. So for half year, the EPS is already 25.4, and if we annualise it, then the EPS comes around to be rs 51/-. In my opinion, it is still very cheap compared to its peer.
As per the money control site, Sakthi`s financial year ends in Mar. In the last finacial year, it made losses in some quarters, so probably that`s why the P/E is so high.
Share prices r based on future EPS and sugar being in shortage 4 another 6 quarts all sugar cos wl hv highest EPS of their life for next quarts.sO AT CURRENT PRICE sakthi is cheapest sugar stock.Just look at Dhampur From 20 to 140 in less than a year.
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