The brokerage, which released a report on July 18, said: "For the quarter, Sakthi’s reported healthier set of figures beat our expectations. Revenue stood at Rs 2.58bn, up 36.5% yoy; profits (after the extraordinary write-off) rocketed to Rs 354m (Rs 20m a year ago). Operating margins posted a phenomenal jump – from 12.7% to 26.6% yoy, led by a rise insugar realisations (both domestic and international white sugar). EBIDTA for the quarter jumped to Rs 687m (from Rs 241m a year ago). Higher interest expense remains one of the key fears for the company. Interest expense posted a steep 39.7% rise yoy, to Rs 286m.
"For the quarter, the company sold about 10.08 lakh quintals of sugar, a robust 37.7% yoy increase.Around 5.8 lakh quintals of sugar were exported during the quarter, benefiting from spiralling international prices. Average sugar realisations rose sharply, to Rs 1,904 a quintal, up 18% yoy,exceeding our expectations.
"For FY06, profits (after the extraordinary write-offs) rose manifold, to Rs 985m, and revenue strengthened by 42.3%, to Rs 8.78bn, on the back of a 41.7% rise in sales volumes of sugar, to 36.12 lakh quintals, and a steep 11.9% rise in average sugar realisations, to Rs 1,735 a quintal. The company exported around 8.9 lakh quintals of sugar during the year.
"For FY07, we estimate revenue and profit of about Rs 9.65bn and Rs 1.33bn. At the CMP, the stock trades at 4.9x and 3.5x FY07E and FY08E diluted earnings. We maintain an OUTPERFORMER rating on the stock."
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