Buy Small-Cap Sugar Stock, Likely To Give 25% Return, Jumps 405.77% In 3 Yrs: ICICI Direct

ICICI Direct has come up with a "Buy" call on Dwarikesh Sugar Industries Ltd. (DSL), a Sugar sector small-cap stock. The brokerage has assigned Rs. 115 apiece, sees gains of up to 25% from its current level.

DSL is primarily engaged in the manufacturing of sugar and allied products. It has a strong presence in fields such as sugar manufacturing, power and ethanol/ industrial alcohol production. It has a market capitalisation of Rs. 1,724.84 crore.

Q4FY23 Results

According to ICICI Direct, DSL reported weak results due to low recovery, subdued prices. Sales grew 12.1% YoY on account of significant growth in ethanol sales. EBITDA was at Rs. 86.4 crore, down 15.6% YoY, with margins at 16.2%. Consequently, PAT was at Rs. 46.8 crore (down 21.6% YoY).

Buy DSL for a Target Price of Rs 115/share

According to brokerage, DSL's share price has gone up 3.9x in the last five years (from Rs. 23 in April 2018 to Rs. 92 in April 2023). "We cut earnings estimate considering lower sugar volumes, dip in recovery, increase in sugarcane SAP & higher income tax rate. We maintain our BUY rating on the stock. We value the stock at Rs. 115, valuing the business at 12x FY25 PE," ICICI Direct said.

Stock Outlook

Currently, the stock is trading 0.33% higher at Rs.91.90 apiece. It hit the 52 week high on 29 April 2023 at Rs. 132.70 apiece, and the 52-week low on 20 March 2023 at Rs. 75 apiece, respectively.

The stock has fallen 2.235 in the past 1 week. It surged 7.85% in 1 month. It has fallen 25.19% in the past 1 year, In the past 3 years it has given a robust 405.77% positive return. In 5 years it has given 269.68% positive return.

About - Dwarikesh Sugar Ltd. (DSL)

Dwarikesh Sugar (DSL) is a UP-based sugar company with sugar crushing capacity of 21500 TCD, distillery capacity of 337.5 KLD & co-generation capacity of 96 MW. The company would be diverting 15-20% of sugarcane towards juice ethanol & remaining towards B-heavy ethanol, which would be 1.3 lakh tonnes of sugar equivalent sugarcane diversion towards ethanol.

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.