The shares of this leading sugar producer gained 7.5 percent to ₹86.85 per share on Monday after the company board approved the buyback of shares at a 30% premium from the market price.
At 12:10 p.m., Dwarikesh Sugar Industries Ltd. shares were trading at ₹83.40 per share, up 3.15 percent from the previous close price on the stock exchange. The company has a market capitalization of ₹1,571 crore.
On March 8, Dwarikesh Sugar Industries Ltd.’s Board of Directors approved a buyback offer involving 30,00,000 fully paid-up equity shares with a face value of ₹1 each. The buyback will be executed at a price of ₹105 per equity share, totaling the paid-up equity share capital of the company.
The proposed buyback, amounting to ₹31.50 crores, accounts for 1.59% of the company’s total paid-up equity share capital at the specified price of ₹105 per equity share. March 20, 2024, has been set as the record date for the buyback process. Notably, the buyback price reflects a nearly 30% premium over Friday’s closing price of ₹81.40.
The company’s revenue has declined 18 percent year on year, from ₹383.84 crore in Q3FY23 to ₹312.91 crore in Q3FY24. During the same period, net profit has also decreased by 6.7 percent, from ₹10.52 crore to ₹9.81 crore.
Dwarikesh Sugar Industries Ltd 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 is also a bio-energy company with supporting businesses of sugar manufacture and power co-generation.
The company operates three plants in Uttar Pradesh, with two situated in the Bijnor district and the other in the Bareilly district. It has a total distillery capacity capable of producing 337.5 kiloliters of ethanol per day across its two sugar units. Additionally, the company has an overall sugar production capacity of 21,500 TCD and a cogeneration capacity of 96 MW.
In Q3FY24, the company witnessed a remarkable 132% surge in domestic sugar sales, yet the cumulative sales for 9MFY24 experienced a 9% decline when compared to the corresponding periods of the previous year. However, the overall quantity of sugar sold, encompassing both domestic and export, recorded a decrease of 24% in Q3FY24 and 34% in Q9 FY24 as opposed to the corresponding periods of FY23.
The crushing activity during the quarter also decreased by 1.89%, reaching 122.72 lakh quintals, in contrast to 125.08 lakh quintals in the corresponding quarter of the previous year. The results of the sugar segment for 9MFY24 were adversely affected by an additional levy obligation related to Molasses year 2022-23 imposed on the company. This imposition treats both B heavy and C heavy molasses as equivalent, irrespective of their respective potential ethanol output, resulting in an unjust impact on the company.
Written by Omkar Chitnis
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