Balrampur Chini gains 5%; rallies 17% in last six days

The company has received total orders of 157,100 kilo litres for supplying ethanol to both public sector and private sector oil marketing companies (OMCs).

Shares of Balrampur Chini Mills (BCML) were up 5 per cent at Rs 359.90 on the BSE in Wednesday’s intra-day trade, on the back of heavy volumes.

The stock of the sweetener has rallied 17 per cent in past six trading days, after the company announced that it had received total orders of 157,100 kilo litres for supplying ethanol to both public sector and private sector oil marketing companies (OMCs).

At 11:02 am; BCML was trading 4 per cent higher at Rs 357.25 on the BSE. In comparison, the S&P BSE Sensex was down 0.01 per cent at 57,891 points. The trading volumes on the counter jumped nearly four-fold with a combined 3.3 million equity shares having changed hands on the NSE and BSE. The stock had hit a record high of Rs 398.25 on October 18, 2021.

On December 20, 2021, BCML announced that the company had participated in tenders floated by public sector OMCs for supplying ethanol for the period starting December 1, 2021 till November 30, 2022 at their various locations across the country. “Accordingly, we have been allocated 139,100 Kilo litres from our various manufacturing units at Uttar Pradesh,” the company said.

In addition to the aforesaid, BCML was in receipt of an order to supply 18,000 kilo litres of ethanol to private sector OMCs. Hence, the company received total orders of 157,100 kilo litres for supplying ethanol to both public sector and private sector OMCs, it had said.

Meanwhile, BCML has announced large capex of around Rs 993 crore over FY2022-FY2023 towards distillery capacity expansion, modernisation of plants/debottlenecking and setting up of refineries. For funding the said capex, Rs 500-crore debt (partially under interest subvention) is planned to be availed.

According to rating agency ICRA, BCML’s operating profits are likely to be less volatile than the historical levels in the medium term, driven by the expected continuation of MSP and the industry’s focus on diverting excess cane towards ethanol production.

ICRA expects higher sucrose diversion towards B-heavy molasses/juice-based ethanol, coupled with healthy prospects for sugar exports to allow maintenance of demand-supply balance at national level. This would support the domestic prices over the near term, it believes.

ICRA has reaffirmed the ratings assigned to BCML’s debt facilities factoring in large scale of operations with a crushing capacity of 76,500 tonnes of cane per day (TCD). Further, its forward integration into distillery and co-generation provides alternate revenue streams and cushion against the cyclicality in the sugar business to some extent. Additionally, BCML is planning to expand its distillery capacities to 1,050 kilo litre per day (KLPD) by November 2022, which will further strengthen its operating profile going forward, the rating agency said in a rationale.