ANOTHER INTERESTING STOCK TO WATCH:
Most of the UP stocks have been running apart from KM so KM SUGARS is obviously in focus and may be ripe for a sharp rally, on the other hand we might have an element of surprise to the UP based stocks that is the UP state elections in 2017.
So next could be south based stocks and as Karnataka elections are due in 2018 that's an year after UP.
Coming back to the company: Ugar Sugar Works Ltd is having its factories in the state of Karnataka.
The company has an TCD Capacity of 18000 .
The company has a debt of only 190 crores and the march 2016 quarterly net profit was at almost 62 crores.
The company clocked an quarterly EPS of 5.48 in March Quarter and with half year losses the full year EPS came in as 1.00 against a loss of 0.29 EPS in last fy.
With sugar prices going up and strong reports of global shortage of sugar going forward if the company delivers four quarters with an EPS of 5.48 that would make the annual eps of 21.92 and if we give just 5 times rating to that the stock price works at almost 110.
On the down side 18 good be a good support for the stock to enjoy a long-term ride.
Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.
UGAR SUGAR WORKS LTD.
MCAP: 340 Odd Crores.
CMP: Around 33/-
The company announced its results for March 2016 quarter and the annual performance is as follows :- Link To Results
The global sugar prices have rallied sharply overnight, putting the focus back on sugar stocks, now the governments import curb lifting policy won't help because the prices are moving up sharply at the international level too.
Most of the UP stocks have been running apart from KM so KM SUGARS is obviously in focus and may be ripe for a sharp rally, on the other hand we might have an element of surprise to the UP based stocks that is the UP state elections in 2017.
So next could be south based stocks and as Karnataka elections are due in 2018 that's an year after UP.
Coming back to the company: Ugar Sugar Works Ltd is having its factories in the state of Karnataka.
The company has an TCD Capacity of 18000 .
The company has a debt of only 190 crores and the march 2016 quarterly net profit was at almost 62 crores.
The company clocked an quarterly EPS of 5.48 in March Quarter and with half year losses the full year EPS came in as 1.00 against a loss of 0.29 EPS in last fy.
With sugar prices going up and strong reports of global shortage of sugar going forward if the company delivers four quarters with an EPS of 5.48 that would make the annual eps of 21.92 and if we give just 5 times rating to that the stock price works at almost 110.
On the down side 18 good be a good support for the stock to enjoy a long-term ride.
Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.
Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”
Disclosure: It is safe to assume that i might have UGAR SUGAR WORKS LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.
Mr. Ace, sugar is a seasonal business and you can not project one quarterly result for the rest 3 quarters. You seem to be luring the retail investors by overestimating and giving rosy projections of EPS !! You should have recommended the stock when it was languishing below 10 rupees level...
ReplyDeleteRamesh ji- I am not luring anyone, I understand its a cyclical business but i am discounting any further rise in sugar price which is expected, I am discounting that rating could be better than 5 times where as at peak the rating of the sector has been much better in the past, as i minus growth and better rating i multiplied it to four quarters.
DeleteIt is not too difficult to understand but once you start viewing things negatively and form a negative opinion about someone you are only going to see the negatives.. That's basic human psychology.
And for your kind information, I do not recommend any stock i just start a discussion on it, I would have posted about the company at 10 if i believed that sugar sector is in a bull run and i would have known about the company, I under-estimated the sector badly back then.
And all kinds of messages and inputs are welcome here.
I just feel sugar as a sector is looking really hot at a global level currently and might be their "ACHHE DIN" for next 1-2 years.
I am shareholder of Ugar for past several years and never seen stock of Rs. 10 crossing Rs. 40 mark. Earlier it used to be Rs.100 share which was split into Rs. 10 share. So current share crossing Rs. 100+ looks unreasonable target in my opinion. I agree it's well family run company.
ReplyDeleteBrother i don't understand why what has not happened in past will not happen in future, And i am not saying it will cross 100+, The sector is looking really hot to me currently and i just put that thing in prospective here.
DeleteMore details on global position of the sugar sector can be found on Valuepickr: http://forum.valuepickr.com/t/sugar-cycles-7-8-years-of-losses-followed-by-2-3-years-of-super-gains/
Good research article.could you please provide your views on associated alcohol and fluidomat?
ReplyDeleteNext quarter onwards would be crucial for Associated and i will have a close eye on the same, coming to Fludiomat i don't track it bro.
DeleteI fully agree with your analysis of Ugar but i think you have given very very conservative targets. Sugar sector companies commends PE of 15-20 and i think in worst of cases ugar should deserve PE of 10.
ReplyDeleteBrother i have taken 4 quarters which is not true as it is cyclical however this time around maybe four quarters might be profitable or with little loss.. On the EPS if we are over assuming 21.92 then we are under assuming the p/e. What that does is we can think 110 may come with higher p/e rating instead of 22 EPS.
DeleteSorry.. I do not understand.If sales for entire year ending March 2016 is 352 odd crores, how come Sales only for the March qtr is more at 380 crores?
ReplyDeleteHaha sorry, It happens when i don't get enough sleep and write stuff.
DeleteHas been corrected.
sirji
Deletetill when sugar rally will go on..what is the expected targets of dhampur sugar
thanks
Hello Ace,
ReplyDeleteI am one of your fan, following your research and picks. I really appreciate!! Keep your great work in teaching retail investors.
Yes, Sugar sector is really hot as globally sugar prices are shooting up after long time .
Porinju Veliyath in one of its interview with CNBC , last Diwali said the turn around sector will be sugar. I did not release that he had a vision on sugar sector which came true now. Though I bought Rana sugars two years back based on the recommendation by Headstead in Lycos board.
Currently holding positions in Rana Sugars, KM Sugars and Kakatiya Cements. I was watching KM sugars when it was languishing around 2, as I did not had any vision I did not buy.
Why don't you take a look @ Kakatiya cements which has Cement, Sugar and Power sectors in it. It had 10 year volume break out @ 160 with huge cash reserves, low debt and continuous dividend for the past 17 years.
Your education is very much appreciated.
Thanks,
Arun Devadoss
Yes Kudos to Porinju for picking it at the right time.
DeleteKakatiya has given huge move already..Like 50 to 600, can't do much really at cmp as risk reward will not be very favorable.
Thanks a lot for your prompt response!!
DeleteMuch Appreciated !!
Finally you picked Ugar sugar before our beloved KK sir. Great vision and pick !!
I have made few investments out of your picks and used to read all of your picks.
I would like to do more research on equities , As I am in U.S I get some time to do some basic analysis in stocks . I need more education from you , KK sir etc to pick a quality stock .
Please let me know if you need any help I can do from my side.
Thanks,
Arun Devadoss.
Unknown , Sugar company leaders also dont desreve moe than 15 PE. So as Sir suggsted , please be conservative only otherwsie u r inviting trouble
ReplyDeleteUgar suggested by me @16 and KM @4
ReplyDeleteMany congratulations to you, But its not relevant here sir.
DeleteHi Ace.
ReplyDeleteKindly provide some view on Shree Renuka Sugar...and what are the reasonable target for-4-6 months
Many many Congratulations Ace investor for finding this Gem.Circuit in Ugar sugar today.
ReplyDeleteCan we enter Ugar at current level - around 51?
ReplyDeleteSir please present your valuable views on Ugar sugar . I bought at 57 levels is it good to hold now or is the sugar rally finished?. Regards.
ReplyDelete