Avadh Sugar & Energy hits 52-week high, jumps over 100% in four months

The stock hit a 52-week high of Rs 737 in today's trade and has rallied 64% in the past month after the company announced a 1:1 bonus issue.

Shares of Avadh Sugar & Energy rallied 10 per cent to hit a 52-week high of Rs 737 in the intra-day session on Tuesday. The stock has jumped 109 per cent over the past four months on improved earnings.

In the last one month, the stock has surged 64 per cent after the company announced 1:1 bonus and reported record quarterly profit of Rs 85 crore in March quarter of the financial year 2018-19 (Q4FY19). In comparison, the S&P BSE Sensex was up 3.3 per cent during the period.

Avadh Sugar & Energy had posted a net profit of Rs 85 crore in Q4FY19, against a net loss of Rs 39 crore in the corresponding quarter of the previous fiscal. The company reported operating profit of Rs 148 crore against loss of Rs 10 crore in the year-ago quarter.

The management said the challenging business environment for the sugar sector continued during financial year 2019 on account of glut of sugar in the market, which hampered the performance during the first half of the financial year.

The latter half of the year experienced many positive changes in the market dynamics. Increase in minimum support price (MSP) to Rs 31, export quotas, augmented prices of ethanol, increase in ethanol realisations have all played a crucial role towards improving the operational margins, it added.

The company is hopeful that the policy decision of diverting sugar capacity towards ethanol production and encouraging exports of sugar will help to rein-in the huge inventories in the industry.

In 2017, the Scheme envisaged Birla Group of Sugar Companies to re-arrange its business activities, to achieve the business alignment as per market dynamics and variant capital needs of each business as well as to house geographically in separate entities its sugar, investments, tea and food processing businesses.

Pursuant to the said scheme, the sugar business operations in Uttar Pradesh became part of the Avadh Sugar & Energy viz Hargaon Sugar Mills, Seohara Sugar Mills, Rosa Sugar Works and New India Sugar Mills, Hata.

Despite a sharp run-up in the past couple of months, the stock of Avadh Sugar is down 44 per cent from its all-time high level of Rs 1,315 touched on November 7, 2017 on the BSE in intra-day trade.

At 01:35 pm, Avadh Sugar was trading 9 per cent higher at Rs 733, as compared to a 0.23 per cent decline in the S&P BSE Sensex. A combined 2,32,192 shares changed hands on the counter on the NSE and BSE so far.