1. 1
Balrampur Chini Mills
Sensex: 24121 CMP:INR62 Target : INR 75
Sugar
Declining volumes & realisations impacting sugar performance
Sugar segment's revenue decreased by 6.3% to INR 6334 mn,
contributing 90.5% to revenues, on the back of 3.6% decline in
volumes and 10.8% drop in realisations. BCML sold 17.83 lakh qtl
in Q4FY14 vs 18.50 lakh qtl in Q4FY13 due to sharp decline in
prices. PBIT however surged by 10.0x to INR 1106 mn due to sugar
inventory valuation adjustment resulting in 11.3% increase in
closing stock to INR 13185 mn.
Sudden decline of 31.1% in export subsidy of raw sugar to INR
2275/ton from April 14 is unlikely to impact much as almost 1.5
mt of raw sugar has already been exported and mere 0.3 mt is
expected to be exported by Sept 14.
Performance of allied segments - the savior
Improving ethanol dynamics to benefit immensely
Distillery segment's revenue declined by 11.2% to INR 714 mn
largely due to 11.7% drop in sales volumes to 18537 kl. Average
realisations improved by 20.4% to INR 34.8/bl. We expect
improving ethanol dynamics to benefit the company. Distillery
volumes & realisations are expected to surge by 3.9% & 7.3%
respectively over FY14-16E.
Increased rates & revenues from REC to boost profitability
Cogeneration segment's revenue surged by 17.1% to INR 1573 mn
and it earned a PBIT. After negotiating with power authorities since
past many quarters, sugar companies have been allowed to sell
REC(RenewableEnergyCertificate)entitlement(onthepowerused
for captive consumption). BCML has booked INR 46 mn from the
sale of RECs in Q4FY14 and expects to book additional INR 250 mn
inFY15.WithmostofthePPAssetforrenewalinFY15,management
expects higher contracted rates in next couple of months.
May 19, 2014 RESULTUPDATE-Q4FY14
Linking of cane price on the anvil
We expect the recently formed committee by UP government to
follow similar footsteps of Maharashtra & Karnataka government
and linking the cane prices with sugar prices. BCML expects the
decision to be taken before the start of the next sugar season in
Oct 14. Further the UP based sugar players are hoping that UP
government will to pay INR 9/qtl of the cane cost directly to the
farmers as was promised at time of deciding SAP. If paid, BCML
will benefit by INR 700 mn as it has already accounted for this
cost in FY14.
3.5% decline in all India sugar production
Indian sugar production has declined by 3.5% to 23.75 mt till
30th April'14, primarily due to 14.3% drop in UP production to
6.41 mt & 2.0% fall in Maharashtra 7.65 mt, on account of lower
acreage and lower yields. Planting in UP is currently underway
and a clearer picture on acreage for the next season will be
available by Jul-Aug'14.
Outlook & Valuation
BCML being one of the largest and most efficient sugar producers
in the country is best placed to capitalize on the positive structural
changes witnessed by the industry. Improving ethanol dynamics
and robust balance sheet will aid profitability. Formation of
committee by UP state government with respect to linkage of sugar
price and cane price raises some ray of hope for solutions to long
prevailing problem in the industry. We introduce FY16 numbers
in our estimates and retain our BUY rating on the stock with a
revised target of INR 75.
Shareholding (%) Mar-14
Promoters 40.84
FIIs 17.97
DIIs 14.48
Others 26.71
Relative Price Performance
Key Data
BSE Code 500038
NSE Code BALRAMCHIN
Bloomberg Code BRCM IN
Reuters Code BACH.BO
Shares O/S (mn) 244.80
Face Value 1
Mcap (INR bn) 15.26
52 Week H/L 64.25/34.60
2W Avg. Qty, NSE 908519
Free Float (INR bn) 9.03
Beta 0.43
Y/E March (INR mn) FY13 FY14 FY15E FY16E
Net Sales 32748 26649 28898 30556
Growth (%) 41.80% -18.62% 8.44% 5.74%
EBIDTA Margin (%) 12.82% 8.03% 9.16% 9.65%
APAT 1619 36 543 713
Growth (%) 37558.14% -97.75% 1390.93% 31.43%
EPS 6.63 0.15 2.22 2.91
P / E 9.41 374.93 28.12 21.40
P / BV 0.81 1.12 1.13 1.09
EV/EBIDTA 5.72 10.74 9.24 7.95
Net Debt-Equity Ratio 1.20 1.00 0.88 0.75
RoACE (%) 11.25 4.62 6.95 7.94
RoAE (%) 12.81 0.29 4.23 5.18
BCML reported mixed set of numbers with 6.0% drop in revenues and 2.7x improvement in profitability largely due to
sugar inventory valuation adjustment (stocked inventory @ INR 31.96/kg vs Q4 avg realisation of INR 28.90/kg). 11.7%
decline in distillery sales volumes was compensated by sharp 20.4% surge in realisations. Linking of cane price with sugar
price remains the only viable long term solution for the industry. We expect the recently formed committee by UP
government to follow similar footsteps of Maharashtra & Karnataka government by adopting the Rangarajan committee
formula. We introduce FY16 numbers in our estimates and retain our BUY rating on the stock with a revised target of INR 75.
Rohit Agarwal
rohit.agarwal@spagroupindia.com
Ph. No. 91 33 40114800/ 839
60
80
100
120
140
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
BCML Sensex

2. 2
Sugar
Quarterly Financials
Particulars (INR mn) Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 YoY Chg QoQ Chg
Net Sales 7447 6816 5683 6907 7000 -6.01% 1.34%
Other Income 259 79 39 56 85 -67.14% 52.51%
Total Income 7706 6895 5722 6963 7085 -8.06% 1.75%
Total Expenditure 6211 6327 6314 6988 4617 -25.67% -33.93%
Raw Material Consumed 16743 2234 66 4042 16414 -1.97% 306.12%
Stock Adjustment (11850) 3398 5484 2211 (13185) 11.27% -696.37%
COGS 4894 5631 5550 6253 3229 -34.02% -48.36%
Employee Expenses 404 294 321 336 456 12.96% 35.78%
Other Expenses 914 402 443 400 932 2.01% 133.27%
EBIDT 1496 569 (592) (25) 2468 65.04% LP
EBIDTM (%) 16.60% 7.18% -11.10% -1.17% 34.05% 1744 bps 3522 bps
Interest 267 400 335 208 229 -14.22% 9.85%
PBDT 1229 168 (927) (233) 2240 82.23% LP
Depreciation 262 266 275 275 270 3.13% -1.68%
PBT 967 (98) (1202) (508) 1970 103.64% LP
Tax 258 0 20 0 71 -72.50% -
APAT 710 (98) (1221) (508) 1899 167.54% LP
APATM (%) 9.53% -1.43% -21.49% -7.35% 27.13% 1760 bps 3448 bps
EPS 2.91 (0.40) (5.00) (2.08) 7.77 167.54% LP
Equity 244 244 244 244 244
Segment Performance
Sugar
Production (lacs qtl) 55.1 6.8 0.0 12.4 56.3 2.29% 353.91%
Sales Volumes (lacs qtl) 18.5 17.1 15.7 19.3 17.8 -3.62% -7.71%
Avg realisation - free sugar (INR/kg) 32.4 31.9 31.0 30.2 28.9 -10.75% -4.18%
Revenues 6761 5787 5035 6194 6334 -6.31% 2.25%
PBIT 110 (413) (976) (772) 1106 903.63% -243.21%
PBITM (%) 1.63% -7.13% -19.38% -12.47% 17.46% 1583 bps 2993 bps
Distillery
Distillery - Production (KL) 26228 25615 6739 14052 31543 20.26% 124.47%
Distillery - Sales Volumes (KL) 20995 18870 18862 17810 18537 -11.71% 4.08%
Average realisation (INR/BL) 28.9 29.6 32.1 34.2 34.8 20.35% 1.73%
Revenues 804 563 621 621 714 -11.21% 14.99%
PBIT 456 272 258 257 375 -17.73% 46.09%
PBITM (%) 56.77% 48.29% 41.58% 41.40% 52.60% (417 bps) 1120 bps
Cogeneration
Power - Production (lakh units) 3513 2373 390 1263 3479 -0.98% 175.46%
Power - Sales (lakh units) 2292 1944 324 920 2286 -0.26% 148.48%
Average realisation (INR/unit) 3.84 4.29 4.25 4.29 4.01 4.43% -6.53%
Revenues 1344 939 200 582 1573 17.10% 170.53%
PBIT 774 564 (43) 233 766 -1.11% LP
PBITM (%) 57.64% 60.01% -21.38% 40.04% 48.67% (896 bps) 863 bps

3. 3
Financials
Income Statement
Y/E March (INR mn) FY13 FY14 FY15E FY16E
Net Sales 32748 26649 28898 30556
Growth (%) 41.80% -18.62% 8.44% 5.74%
Cost of goods sold 25190 20909 22542 23522
Employees Cost 1295 1417 1560 1650
Other Mfg. Expenses 1170 0 1300 1528
Total Expenditure 28551 24509 26252 27608
EBIDTA (without OI) 4198 2140 2646 2948
Growth (%) 76.42% -49.02% 23.62% 11.44%
EBITDA Margin % 12.82% 8.03% 9.16% 9.65%
Depreciation 1084 1095 1119 1144
EBIT 3114 1046 1527 1804
EBIT Margin % 9.51% 3.92% 5.28% 5.90%
Interest Expenses 1439 1178 1131 1153
Other Income 423 259 290 305
EBT 2098 127 685 956
Tax Expenses 485 90 143 243
PAT 1613 36 543 713
Extraordinary Items (6) 0 0 0
Net Profit 1619 36 543 713
Growth (%) 37558.14% -97.75%1390.93% 31.43%
Net Profit Margin (%) 4.94% 0.14% 1.88% 2.33%
EPS 6.63 0.15 2.22 2.91
Growth (%) 37558.14% -97.76%1390.93% 31.43%
Balance Sheet
Y/E March (INR mn) FY13 FY14 FY15E FY16E
SOURCES OF FUNDS
Share Capital 244 245 245 245
Reserves 12916 11919 13233 13803
Total Networth 13161 12163 13478 14048
Total Debt 17669 13561 13061 12561
Total Liabilities 30829 25725 26540 26609
APPLICATION OF FUNDS
Fixed Asset 15283 15246 15896 15427
Investments 422 408 408 408
Total Current Assets 26528 25937 24654 25808
Total Current Liabilities 9097 13221 11778 12426
Net Current Assets 17431 12717 12876 13382
Miscellaneous Expenses not written off 0 0 0 0
Net Deferred Tax (2306) (2645) (2640) (2607)
Total Assets 30829 25725 26540 26609
Cash Flow
Y/E March (INR mn) FY13 FY14 FY15E FY16E
EBT 2098 127 685 956
Depreciation 1084 1095 1119 1144
Interest 1439 1178 1131 1153
Inc./Dec. in working capital 2049 4237 (405) 279
Tax paid (424) (429) (137) (210)
Other Income (423) (259) (290) (305)
Cash flow from operations (a) 5823 5948 2103 3017
Inc./Dec. in investments (0) 15 0 0
Change in Fixed Assets (142) (759) (550) (650)
Change in CWIP (47) (299) (100) 0
Others 170 170 195 205
Cash flow from investing (b) (19) (873) (455) (445)
Inc./Dec. in capital 0 1 0 0
Inc./Dec. in debts (2236) (4107) (500) (500)
Dividend paid (489) 0 (122) (122)
Interest paid (1439) (1178) (1131) (1153)
Others 141 (267) (141) (12)
Cash flow from financing ( c ) (4022) (5552) (1894) (1787)
Opening cash balance 131 1912 1435 1189
Cash Flow during the year (a+b+c) 1781 (477) (246) 785
Closing cash balance 1912 1435 1189 1975
Key Ratios
Y/E March FY13 FY14 FY15E FY16E
Per Share Data (INR)
Adjusted EPS 6.63 0.15 2.22 2.91
CEPS 11.32 3.24 6.81 7.72
DPS 2.00 0.00 0.50 0.50
BVPS 53.87 49.69 55.06 57.39
Return Ratios
RoACE (%) 11.25 4.62 6.95 7.94
RoAE (%) 12.81 0.29 4.23 5.18
Balance Sheet Ratios
Net Debt-Equity Ratio 1.20 1.00 0.88 0.75
Current Ratio 2.92 1.96 2.09 2.08
Interest Cover Ratio 2.46 1.11 1.61 1.83
Efficiency Ratios
Total Asset Turnover 1.04 0.94 1.11 1.15
Inventory Days 248 296 282 261
Debtors Days 18 17 10 11
Creditors Days 85 129 131 118
Valuations
P / E 9.41 374.93 28.12 21.40
P / BV 0.81 1.12 1.13 1.09
Dividend Yield (%) 3.21 0.00 0.80 0.80
Market Cap / Sales 0.33 0.51 0.53 0.50
EV/EBIDTA 5.72 10.74 9.24 7.95
Sugar

4. 4
Sugar
Disclaimer: This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. SPA Securities Limited
(hereinafter referred as SPA) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should
not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis
for an investment decision. The intent of this document is not in recommendary nature. The views expressed are those of analyst and the Company may or may not subscribe to
all the views expressed therein The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon
such. SPA or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information
contained in this report. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or
consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. SPA or any of its affiliates or employees do not provide,
at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness
for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. SPA and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned
in this report. SPA has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Disclosure of Interest Statement
1. Analyst ownership of the stock - No
2. Group/Directors ownership of the stock - No
3. Broking relationship with company covered - No
This information is subject to change without any prior notice. SPA reserves the right to make modifications and alternations to this statement as may be required from time to time.
Nevertheless, SPA is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries.
SPA Securities Ltd SEBI Reg. Nos.
NSE Cash INB231178238
NSE Future & Option INF231173238
NSE Currency Derivatives INE231178238
BSE Cash INB011178234
BSE Currency Derivatives INE011178234
MCX-SX Cash INB261178231
MCX-SX Future & Option INF261178231
MCX-SX Currency Derivatives INE261178238
USE Currency Derivatives INE271178234
Mutual Fund ARN 77388
OTCEI INB200891838
PMS INP000003179
CDSL DP IN-DP-CDSL-485-2008
NSDL DP IN-DP-NSDL-316-2009
SPACAPITALSERVICES LIMITED
Investment Advisory Services,
AMFI Reg. No. ARN-0007
SPACAPITALADVISORS LIMITED
SEBI registered Category-1
Merchant Bankers
SEBI Regn. No. INM000010825
SPACOMTRADE PRIVATE LIMITED
Member of NCDEX & MCX.
NCDEX TMID-00729,
NCDEX FMC No.NCDEX/TCM/CORP/0714
SPAINSURANCEBROKINGSERVICESLTD
Direct Broker for Life and General
Insurance Broking
IRDA Lic. Code No. DB053/03
For More Information Visit Us At : www.spasecurities.com
Sharad Avasthi Dy Head - Equity Research sharad.avasthi@spagroupindia.com Tel.: +91-33-4011 4800 Ext.832
SPA Securities Ltd: Mittal Court, A-Wing, 10th Floor, Nariman Point, Mumbai - 400 021, Tel. No. : +91-022-4289 5600, Fax: +91 (22) 2657 3708/9