Recommendations from Sugar & Breweries -Distilleries Sectors

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
 

DWARIKESH SUGAR INDUSTRIES LIMITED

CMP - Rs 76.70
BSE CODE : 532610
Volume : 14,04,492
Face Value : Rs 1
Target : Rs 87
Stoploss :Rs 68 (CLS)

Dwarikesh Sugar Industries Limited (DSL) is an India-based company engaged in the business of manufacture and sale of sugar co-generation of power and industrial alcohol. The company operates in three segments: sugar, co-generation and distillery. On a quarterly basis, the standalone numbers of the company reveal net sales and operating income at Rs 392.22 crore in Q1FY22, 10.93 per cent lower than Rs 440.35 crore reported in Q1FY21. The operating profit zoomed 17.68 per cent from Rs 50.63 crore in Q1FY21 to Rs 59.58 crore in Q1FY22. The company reported net profit at Rs 27.10 crore in Q1FY22 compared to net profit of Rs 18.10 crore reported in Q1FY21, clocking robust gains of 49.74 per cent. DSL is planning distillery capacity addition of 175 KLD with an investment of Rs 230 crore, to be commissioned this month. The demand for sugar will also be boosted due to the forthcoming festive season. Hence, we recommend BUY.

G M BREWERIES LIMITED

CMP - Rs 621.90
BSE CODE : 507488
Volume : 29,947
Face Value: Rs 10
Target : Rs 760
Stoploss : Rs 570 (CLS)

G M Breweries Limited (GMBL) is engaged in the manufacturing and marketing of alcoholic beverages such as country liquor (CL) and Indian made foreign liquor (IMFL). The company is the largest manufacturer of country liquor in the state of Maharashtra with a sizeable market share. It has witnessed a robust jump in net sales and operating income from Rs 96.81 crore in Q1FY21 to Rs 272.80 crore in Q1FY22. The operating profit also soared from Rs 5.07 crore in Q1FY21 to Rs 17.06 crore in Q1FY22. The quarter saw net profit of Rs 11.64 crore as compared to Rs 2.43 crore in Q1FY21, clocking massive gains. The company has posted a robust set of financial numbers and does not foresee any major threats to its growth and market share in the coming period. The outlook for the liquor sector also inclines to be positive amid economic recovery, expanding set of middle-class base, rising disposal income and increasing consumption in rural areas. Hence, we recommend BUY.

(Closing price as of Oct 04, 2021)