Triveni Engineering Vs EID Parry: The recent few years have marked a significant change in the fuel & automotive policies of the country. The Government is looking to slowly phase out the use of harmful fossil fuels, alternating it with the use of an Ethanol Blend mixed with the traditional fuel. This gives a breath of fresh air to an otherwise large & slow-growing industry.

Ethanol is produced because of the fermentation of starch that converts the sugars to alcohol. This simply means that India’s sugarcane industry would be opened to a vast amount of opportunity. Approximately India would require 1016 Cr Liters of Ethanol which will vastly disrupt sugar cane demands.

Triveni Engineering Vs EID Parry

In this article on Triveni Engineering Vs EID Parry, we will compare two of the biggest players in the sugarcane industry and analyze them. We will see that sugar manufacturers have the versatility to produce for other segments like Energy & Alcohol as well. Once we have learned all about their segments, we will finally compare the two & conclude.

Company Overview

Triveni Engineering & Industries

Triveni Engineering & Industries is one of the largest integrated sugar manufacturers in India cultivating sugarcane in over 2.04Lakh hectares of land. The Company owns 7 manufacturing facilities that crush about 61,000 Tonnes per day. The business that began as a sugar manufacturer has now ventured into multiple segments. Now let us get to know its segments in detail.

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We can dissect the business into two major verticals: Sugar and Engineering

Sugar

Processed Sugar: Triveni manufactures multi-grade sugar, White crystal Sugar, Raw Sugar, and pharmaceutical-grade Sugar. Triveni managed to export about 0.12 million Metric Tonnes of sugar in FY23. 

Power Generation: Processed sugar leaves certain by-products which can be used to generate power. Triveni owns 104.5 MW Power Plants, that help power Triveni’s manufacturing facilities, and the surplus is sold externally.

Alcohol: Triveni is also a producer of Fuel-Grade Ethanol, Extra Neutral Alcohol, and Rectified Spirit. During FY23, Triveni produced and sold 1.8Lakh Kilo Liters of Alcohol annually. The Company is currently planning CAPEX to expand capacity to 1,100 KL per day.

Engineering

Power Transmission: The Company is a dominant player in the Engineered-to-order segment, in which it takes up custom orders to engineer a gearbox and other equipment. Some of its largest clients come from the Defense segment.

Water Treatment Solution: The Company takes up Operations & maintenance orders from other factories to maintain Zero Liquid discharge. It also provides solutions for the desalination of seawater and brackish water. It has completed over 1200+ installations across India treating 12,000+ Million Lt Per day.

Processing of sugar continues to be Triveni’s biggest business contributing to over 66% of its Revenues, followed by Alcohol processing which brings in 21%. The Engineering segment collectively brings another 10-13%.

Triveni Engineering Vs EID Parry - Triveni Industries Business Overview
Source: Company Website

EID Parry

EID Parry (East India Distilleries – Parry) is nothing short of a legacy business. Being set up in 1842 by a British trader named Thomas Parry, EID holds the record for being the first sugar Company in India. From its incorporation till 1928, the Company underwent many name changes before settling on EID Parry. 

It was later acquired by the Murugappa Group in 1981 and has remained a subsidiary of the Group ever since. The Murugappa Group is a ~54,000 Cr business with investments in Companies such as Carborundum Universal, Cholamandalam Finance, CG Power & a lot more. Now let’s learn a bit more about EID Parry.

EID-Parry was the first Company in India to set up its own Distillery in 1843 and the first Power Plant that generated energy using sugarcane bagasse. It is also the first among a few sugar manufacturers in India with a dedicated cane R&D wing and cane breeding program to adopt tissue culture.

The Company currently has 2 Lakh+ acres of land, managed by 1 Lakh+ farming partners. EID also runs 8 manufacturing plants with a total Cane crushing capacity of 40,300 Tonne per day, along with 417 Kilo Liters processed by their distilleries. Its Power Plant has a capacity of 140 MW.

EID earns over 70% of its revenues from cultivating & processing sugar, followed by processing alcohol which brings in 22%. The Power Generation segment brings in another 6%, and the latest venture of nutraceuticals brings in a miniscule 2%. 

Industry Overview – Sugar Industry

India is the world’s largest producer as well as consumer, and 2nd largest exporter of Sugarcane. During Sugar Season 2021-22, India exported 11.1 million Tonnes (MMT) of sugar, generating Rs. 40,000 Cr for the country. India’s Sugar Season (SS) begins in October & ends in September of next year.

Uttar Pradesh is the Country’s largest sugar producer with 10.7 MMT, followed by Maharashtra which achieved 10.5 MMT taking the 2nd place. Karnataka is the third largest producer of sugar, with a production of 5.7 MMT. As per the Agriculture Department, the sugarcane area reached 59 lakh hectares increasing by 6% during SS 2022-23.

As per the Indian Sugarmills Association (ISMA), India’s production reached 35.8 million MT (MMT) in SS2021-22, growing by over 15% from 31.2 MMT in the previous season. However, estimates currently suggest an 8% drop in production for the next season coming around 32.8 MMT. 

The Central Government has been focusing on reducing the country’s dependence on crude oil. The policy would strike two birds with one stone, by reducing our import requirements as well as reducing harmful greenhouse emissions. 

The Government has been actively promoting the production and blending of fuel ethanol with petrol and has targeted 20% blending through the Ethanol Blended Petrol (EBP) Programme or EBP20 by 2025. 

EBP20 will lead to numerous benefits, such as saving of Rs. 30,000 Cr of FOREX per year, lower carbon emissions, self-reliance, use of damaged food grains, increased farmers’ incomes, and better investment opportunities.

Triveni Engineering Vs EID Parry – Financials 

Revenue & Net Profit

Triveni Engineering’s revenue grew by a spectacular 36%, from Rs. 4716 Cr in FY22 to Rs. 6390 Cr in FY23. EID Parry saw an even better growth of 49% from Rs. 23,744 Cr in FY22 to Rs. 35,283 Cr in FY23. EID Parry’s revenue seems consistent & on a long-term basis, is better than Triveni’s. 

Particulars / Fiscal Year201920202021202220234 Year CAGR
Triveni Engineering - Revenue ₹3,215.37 ₹4,472.89 ₹4,733.74 ₹4,716.22 ₹6,390.50 19%
YoY Growth (%)39%6%0%36%
EID Parry - Revenue ₹16,517.82 ₹17,127.80 ₹18,630.60 ₹23,743.78 ₹35,283.02 21%
YoY Growth (%)4%9%27%49%

Net Profits of Triveni skyrocketed by over 3.23x, growing from Rs. 424 Cr in FY22 to Rs. 1792 Cr in FY23. These profits include extraordinary gains worth Rs. 1401.12 Cr. Upon excluding this gain from our Net Profit calculation, we arrive at Rs. 390 Cr, an 8% decrease from FY22. 

EID saw a very moderate gain of 16%, climbing up from Rs. 1574 in FY22 to Rs. 1828 Cr in FY23. EID continues to remain a consistent performer growing its Profits at 43% CAGR in the past 5 Years.

Particulars / Fiscal Year201920202021202220234 Year CAGR
Triveni Engineering - Net Profit₹216.28 ₹335.11 ₹294.60 ₹424.05 ₹1,791.80 70%
YoY Growth (%)55%-12%44%323%
EID Parry - Net Profit₹437.65 ₹888.00 ₹999.82 ₹1,573.70 ₹1,827.74 43%
YoY Growth (%)103%13%57%16%

Profit Margins

Operating Margins of Triveni & EID were around 10.71% & 8.57% respectively. Triveni has consistently maintained a lead over EID in the past 5 years. The 214 Bps difference between Triveni & EID can be attributed to their raw material cost difference.

Moving on to Net Profits we see a greater divide. EID’s net profit margin came around a meager 5.19%, while Triveni steals the show with 31.9% margins. However, we do know that these margins are blown out of proportion by including extraordinary gains.

Particulars / Fiscal Year201920202021202220235 Year Avg
Triveni Engineering - Operating Margins9.65%12.23%11.94%14.65%10.71%11.83%
EID Parry - Operating Margins8.73%11.02%11.19%10.10%8.57%9.92%
Triveni Engineering - Net Profit Margins6.22%7.09%6.28%9.88%31.90%12.27%
EID Parry - Net Profit Margins2.64%5.19%5.38%6.69%5.19%5.02%

Return Ratios

Triveni Engineering’s Return on Equity and Return on Capital Employed came around an inflated 78.33% and 57.35% respectively. Keeping FY23 aside we see these ratios trail along 15%-25%.

EID Parry on the other hand reported an ROE of 32.1% and a ROCE of 42.65%. The Company has been successful in maintaining both ROE & ROCE above 30% in the past two financial years.  

We see a trend of increasing returns from both Companies, although EID takes the lead reporting even higher returns. 

Particulars / Fiscal Year201920202021202220235 Year Avg
Triveni Engineering - RoE18.81%25.41%20.29%24.47%78.33%33.46%
EID Parry - RoE14.44%26.84%24.75%31.83%32.10%25.99%
Triveni Engineering - RoCE12.60%17.73%18.90%20.93%57.35%25.50%
EID Parry - RoCE16.08%21.66%27.74%39.57%42.65%29.54%

Debt Analysis

While analyzing their Debt to Equity we see that both Companies have taken up significantly larger debt back in FY19 with Triveni & EID at 1.5x & 1.64x respectively. Both Companies have worked on reducing their exposure as the Debt to Equity of Triveni & EID are at 0.32x & 0.2x respectively. 

Interest Coverage Ratio of Triveni & EID is at 35.61x and 9.6x in FY23 respectively. Both Companies are in the safe zone with the ratio above 1.5x.

Particulars / Fiscal Year201920202021202220235 Year Avg
Triveni Engineering - Debt to Equity1.51.140.630.810.320.88
EID Parry - Debt to Equity1.641.110.170.150.200.65
Triveni Engineering - Interest Coverage4.646.369.8811.5235.6113.60
EID Parry - Interest Coverage2.973.947.5315.029.607.81

Key Metrics of Triveni Engineering Vs EID Parry

We have now understood both the Companies’ business as well as taken a good comparative look at their financials. Now let us look at a few Key Metrics.

ParticularsTriveni EngineeringEID Parry
CMP₹360.7₹494.1
Market Cap (Cr.)₹8,040.12 ₹8,758.72
EPS₹19.84₹43.94
Stock P/E 1811.23
RoE78.33%32.1%
Book Value₹128.42 ₹332.37
Price to Book Value2.781.39
Promoter Holding60.98%44.51%

Future Plans

Triveni Engineering

  1. During FY23, the Company announced CapEX of Rs. 175 crore which would lead to increased crushing capacity (from 61,000 TCD to 63,000 TCD). Modernization of the facility with efficiency improvements would be major point of focus.
  2. Triveni expects to produce 21 Cr Liters of alcohol in FY 24 and scale it up to 28-32 Cr Liters the following year. This would be made possible by the commissioning of two other distillery units of the Company. 
  3. Triveni is setting up a new multi-modal facility, with large-scale infrastructure for testing of various naval marine equipment.

EID Parry

  1. EID is looking to strengthen its presence in the retail market in branded sugar to benefit from higher and more stable pricing with healthy long-term prospects and a more stable realization for its sugar.
  2. The R&D team at EID explores the opportunities to do selective breeding through a process called introgression, which would bring in genetics from wild relatives of sugarcane.
  3. The Company is also undergoing digital transformation leveraging crop data, meteorological data, and remote sensing satellite imagery to combine with AI-based Algorithms to predict farm-level cane yield.

Conclusion

Now we reach the end of our article having learnt about the industry in greater depth. We see that Sugar does not just have to be the sole product of the sugarcane, and this gives manufacturers the chance to explore multiple other segments. 

Triveni has however ventured a bit beyond & entered the engineering segment, which is much beyond the scope of a sugar manufacturer. EID keeps its focus on sugar manufacturing itself.

Triveni, unfortunately, did not have a great year as its Net Profits saw an 8% fall if we excluded extraordinary gains. EID on the other hand managed to scale its profits at a much decent pace.

So what do you think is a better pick? Do you think India can achieve its ambitious target of 20% Ethanol blending by 2025? Let us know in the comments below.

Written by Nasir Hussain

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment.


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