The share price of a sugar manufacturing company shot up 20 percent on Friday’s early trades to reach an intraday high of ₹ 119.88 apiece. This happened after the company announced robust results for the first quarter (April to June) of the financial year 2023-24. At 01:10 PM, its shares were trading 10.11 percent higher at ₹ 110.00.
According to an exchange filing, Davangere Sugar Company reported a 34.15 percent increase in its consolidated net profit to ₹ 1.10 crore in the April to June quarter (Q1FY24), compared to ₹ 0.82 crores in the corresponding quarter of the previous year (Q1FY23). Its revenue climbed 3.33 percent to ₹ 47.73 crores in Q1FY24, compared to ₹ 46.19 crores in Q1FY23.
Davangere Sugar Company is in the business of sugar manufacturing (by-product molasses) from sugarcane. Its other business segments include aviation, distillery and power.
In the past year, the company’s share price increased from ₹ 23.20 apiece to ₹ 119.38, delivering multibagger returns of 414.57 percent. Therefore, if an investment of ₹ 1 lakh was made in the company’s shares a year ago, the value of the holdings would have been ₹ 5.14 lakh today!
With a market capitalization of ₹ 940 crores, Davangere Sugar Company is a micro-cap company. It has a low return on equity of 4.69 percent and an ideal debt-to-equity ratio of 0.78. Its shares were trading at a price-to-earnings ratio (P/E) of 59.80, which is higher than the industry P/E of 21.36, indicating that the stock might be overvalued as compared to its peers. The company’s promoters hold a 74.45 percent stake in it, followed by retail investors with 25.55 percent.
Written by Simran Bafna
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