Dolly Khanna Latest stock pick Dwarikesh Sugars

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Ravi
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Joined: Tue Dec 27, 2016 3:49 pm
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Dolly Khanna Latest stock pick Dwarikesh Sugars

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Dolly Khanna is bullish about the sugar space. In December 2016, she has bought 234,861 shares of Dwarikesh Sugar. MUKUL M AGRAWAL holds 600,000 shares. Anil Kumar Goel holds 287,100 shares. Indianivesh Capital Limited holds 332,500 shares.

Dwarikesh Sugar is in the Sugar sector. The current market capitalisation stands at Rs 748.59 crore.

The company management includes G R Morarka - Managing Director, B J Maheshwari - Whole Time Director, Vijay S Banka - WholeTime Director & CFO, B K Agarwal - Independent Director, K N Prithviraj - Independent Director.

It is listed on the BSE with a BSE Code of 532610 and the NSE with an NSE Code of DWARKESH.

Its Registered office is at Dwarikesh Nagar , Bijnor District,Uttar Pradesh - 246762.

Their Registrars are Universal Capital Securities Pvt. Ltd.

Here is why Tulsian makes a buy call on sugar stocks

In the midcap end of trade, it is clearly the sugar stocks which are very sweet. We have the chairman of ISMA and he told us that he has met the finance minister. They have made a plea to restructure the debt on the books of sugar companies and consequently the stocks are all up in trade. How would you read this particular development?

A: I think there is some disconnect with the story. I have heard the ISMA president saying that the meeting has taken place with the finance minister and in regard to debt restructuring but I am unable to understand -- just to give you an example that Balrampur Chini is a debt free company, I have seen that flashes that Balrampur Chini has a debt of Rs 1,700 crore. That is totally incorrect. If you see the balance sheet situation – I am just giving an example, then I will come little later on the other stocks as well, Balrampur Chini has a long term debt of Rs 350 crore and that too from the sugar development fund which has interest rate of maybe 2-4 percent and on a working capital, they have a debt of about Rs 250 crore against working capital or maybe the inventory of about Rs 600-700 crore.

Same thing is the case with Dwarikesh Sugar , Dalmia Sugar or maybe take any UP based sugar mills company, I am not talking of Bajaj Hindustan in that category because the problem of Rs 6,000 crore debt is because of their foray into the power generation. So, this stand of asking for debt reduction, in fact let me put the facts correctly that there are no sugar dues in respect to this UP sugar based mill which are listed on the stock exchanges.

Come on Maharashtra, the situation is very precarious in Maharashtra. The mills have started closing down for this season. We call season 16-17 which starts on October 1, so, they are technically supposed to run up to March end or April but I have not seen in my career of 40 years -- I must have visited 100 sugar mills in this last 30 years and I have never seen the crushing coming to an end in the same calendar year. So, in Maharashtra and Karnataka, things have started closing down, mills have started closing down and I think by January 15, all the mills will get closed down and the estimated production of Maharashtra and Karnataka are seen lower by about 40 percent.

If you recall, for the last one week in the afternoon show I have been giving a screaming buy call on the sugar stocks. If you just go by the price chart in this last one week, the domestic prices have risen by Rs 2 per kilogram and mills have stopped selling. Last selling has happened at Rs 3,650 in UP. So, if you go by the whole situation, ISMA has projected a production of 234 lakh for this season but my estimates goes at 215 lakh and I don’t see any reason even to production exceeding beyond 216 lakh also, even by 1 lakh to 216. Maybe ISMA is keeping it at a higher level, not to sensationalise.

So, this debt restructuring which is being talked of is only in respect of Maharashtra mills and whole Maharashtra or maybe I would say 95 percent, maybe two mills held by Dalmia Sugar in Maharashtra, rest all are in the cooperative sector and there they have a huge problem of debt and this thing which doesn’t impact the stock market listed stocks in any way. So, this is pure a fundamental call, in fact the situation is going to get worse once the mills start closing down, totally gets closed down in Maharashtra, in Karnataka and when the revised targets will come in.

Maybe if you see on the global front also, probably in next couple of weeks you will see the commodity prices start hardening there also of the raw sugar and all and that was the reason in fact post our recommendation for last one month on the channel, the stocks have already -- only of the UP based sugar mills stocks have already risen by 15-20 percent in this last one month post our buy call having been given on them. Still we maintain a buy call and I think the best is yet to come because I won’t be surprised to expect a realisation of Rs 38 per kilogram maybe in next one month by the mills based in UP.


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