Dalmia Bharat Sugar EBITDA increased by 700 per cent owing to lower cost of production

Dalmia Bharat Sugar (DBS) announced its third quarter results on Tuesday. The company declared 700 per cent increase in EBITDA on account of lower cost of production this quarter. The stock of company closed at Rs 79.65, an increase of 2.97 per cent from previous close. 

On financial front, the consolidated net revenue from operations of DBS reached  Rs 276 crores in Q3FY16 compared to Rs 260 crores in Q3FY15, an increase of 6.30 per cent year on year (YoY). The EBITDA stands at Rs 42 crores this quarter compared to Rs 5.29 crores in Q3FY15, an increase of 700 per cent YoY. The EBITDA margin of company stands at 15.23 per cent this quarter compared to 2.03 per cent in Q3FY15. The net profit stands at Rs 16.95 crores in Q3FY16 compared to a loss of Rs 17.56 crores in Q3FY15. 

The nine month ending consolidated net revenue from operations increased by 1 per cent and reached Rs 835 crores compared to Rs 830 crores for the same period last year. The net profit for nine month period stands at Rs 2.3 crores compared to a loss of Rs 27 crores for the same period last year.

The substantial increase in EBITDA is attributed to lower cost of production achieved on account of better recovery of 11.20 per cent in UP compared to 10.21 per cent in 9M FY15, whereas Maharashtra units continued to record better recoveries in line with last year. The company currently has significant capacity in downstream products which help it to navigate better through cyclical nature of operations. 

Further commenting on sugar industry outlook the company informed that there has been sharp turnarounds in the fortunes of the industry on account of support from the government initiatives; better operational efficiencies; and higher sugar realisation on account of lower closing stock per cent to off take. Though the above factors augur well in the short term to medium term outlook of the industry, for long term sustainability, however, solution on cane pricing linked to sugar prices needs to be implemented for the benefit of all stakeholders.