Andhra Sugars

 Andhra Sugars Limited is engaged in the manufacture and sale of sugar and caustic soda.

Fundamental

• Market Cap:  703.37 Cr.
• Current Price:  259.45
• 52 weeks High / Low  392.00 / 117.05
• Book Value:  425.56
• Stock P/E: 3.46
• Dividend Yield: 7.71 %
• ROCE: 22.64 %
• ROE: 17.55 %
• Sales Growth (3Yrs): 3.03 %
• Listed on BSE and NSE
• Face Value:  10.00

• PEG Ratio: 0.12
• Promoter holding: 47.03 %
• Pledged percentage: 0.00 %
• Debt:  183.52 Cr.
• Price to Earning: 3.52
• EPS:  74.92
• Net profit:  203.09 Cr.
• Profit growth: 6.61 %
• Profit growth 7Years: 7.92 %
• Net profit preceding 12months: 185.30 Cr.
• Profit growth 3Years: 58.01 %
• Dividend yield: 7.59 %
• Debt to equity: 0.16
• Sales last year:  1,376 Cr.
• Sales growth: 7.32 %
• Unpledged promoter holding: 47.03 %
• Investments:  266.58 Cr.
• Intrinsic Value:  143.23

Andhra Sugars Limited was established in the year 1947. The company has expanded and diversified over the years, beyond Sugar, to produce Organic & Inorganic Chemicals, Fertilizers, Bulk Drugs, Power etc. at its six integrated complexes at Tanuku, Kovvur, Guntur, Taduvai, Saggonda & Bhimadole. The company identifies its business segments as reportable segments as 1) Sugars, 2) Caustic Soda, 3) Power Generation, 4) Industrial Chemicals and 5) Others such as bulk drug, UH 25 and MMH, Liquid Hydrogen, HTPB. P Narendranath Chowdary is the chairman and Managing Director with promoter shareholding of 47.03%.
 

Investment rationale
 

Ethanol production to gain traction - As per National Biofuels Policy, 2018, the government intends to achieve ethanol with petrol blend levels of 10 per cent by 2022 and 20 per cent by 2030. The government is targeting an Ethanol production and supply of 300-350 crore litres and achieve 7.5% ethanol blend levels with petrol for the year FY21. According to Indian Sugar Mills Association (ISMA) due to improved production of sugarcane, production of Ethanol would increase to 375-400 crore litres. Resultantly, we expect company to export molasses to be used in the production of Ethanol.

 

Leveraging on strong R&D - Andhra Sugar was the first to develop indigenous technology for manufacturing of Aspirin with in house R&D efforts and further entered into commercial production in the year 1980. The Aspirin plant has obtained the recognition of USFDA, EDQM & WHO and was also certified by ISO. It contributes to a major share of the quantum of aspirin produced in India and is being exported to USA,UK..etc. This alludes to the fact that company has robust R&D infrastructure. 

 

Outlook and Valuation - The pandemic has been blessing in disguise for sugar companies to fulfil hygienic demand they have ramped up hand sanitizer manufacturing capacity against the backdrop of this virus. Besides, to meet the fuel blending requirement sugar companies have initiated a tripartite mechanism between sugar mills, oil marketing companies and banks so as to give a boost to the ethanol business of sugar mills and evade the problem of working capital. Andhra sugar delivered a robust quarter with quarterly PAT growth of 39.73%YoY. Besides, company has reduced its debt from Rs174crore in FY19 to Rs136crore in FY20. The stock is currently trading at a PE of 3.69x.

 

Andhra Sugars Ltd

The Andhra Sugars Limited is engaged in the manufacture and sale of sugar and caustic soda.

• Market Cap:  703.37 Cr.
• Current Price:  259.45
• 52 weeks High / Low  392.00 / 117.05
• Book Value:  425.56
• Stock P/E: 3.46
• Dividend Yield: 7.71 %
• ROCE: 22.64 %
• ROE: 17.55 %
• Sales Growth (3Yrs): 3.03 %
• Listed on BSE and NSE
• Company Website
• Face Value:  10.00

• PEG Ratio: 0.12
• Promoter holding: 47.03 %
• Pledged percentage: 0.00 %
• Debt:  183.52 Cr.
• Price to Earning: 3.52
• EPS:  74.92
• Net profit:  203.09 Cr.
• Profit growth: 6.61 %
• Profit growth 7Years: 7.92 %
• Net profit preceding 12months: 185.30 Cr.
• Profit growth 3Years: 58.01 %
• Dividend yield: 7.59 %
• Debt to equity: 0.16
• Sales last year:  1,376 Cr.
• Sales growth: 7.32 %
• Unpledged promoter holding: 47.03 %
• Investments:  266.58 Cr.
• Intrinsic Value:  143.23

Add ratio:

 Edit ratios

 295.83

Volume: 122k D: 66%

19 Jul 19

Pros:

Company has reduced debt.

Stock is trading at 0.61 times its book value

Stock is providing a good dividend yield of 7.71%.

Company has good consistent profit growth of 29.46% over 5 years

Company has been maintaining a healthy dividend payout of 19.94%

Cons:

The company has delivered a poor growth of 4.60% over past five years.

Peer comparison Sector:Diversified // Industry: Diversified - Medium / Small

 EDIT COLUMNS

S.No.	Name	CMPRs.	P/E	Mar CapRs.Cr.	NP QtrRs.Cr.	Qtr Profit Var %	Sales QtrRs.Cr.	Qtr Sales Var %	ROCE%	DebtRs.Cr.	ReservesRs.Cr.	Face valueRs.	Div Yld%	EPS 12MRs.
1.	Andhra Sugars	263.55	3.52	714.62	66.36	36.63	343.74	1.11	22.64	183.52	1126.46	10.00	7.59	74.92
2.	Andrew Yule & Co	11.91	106.85	582.34	3.71	627.45	85.89	4.06	2.43	71.96	253.81	2.00	0.00	0.25
3.	Gillanders Arbut	29.00		63.13	-20.20	-129.41	137.39	-25.25	8.09	292.82	254.60	10.00	0.00	-7.14
4.	Surana Telecom	4.45	8.54	60.41	0.51	-57.50	8.03	-0.12	8.29	35.78	88.59	1.00	0.00	0.52
5.	Alchemist	5.70	16.38	7.70	-1.47	51.16	2.64	-58.56	-9.37	764.31	-168.56	10.00	0.00	0.35

Detailed Comparison with:

Quarterly Results Consolidated Figures in Rs. Crores / View Standalone

	Jun 2018	Sep 2018	Dec 2018	Mar 2019	Jun 2019	Sep 2019	Dec 2019	Mar 2020
	338	334	365	340	378	384	372	344
	258	267	290	260	286	300	316	301
Operating Profit	80	67	76	80	91	84	56	43
OPM %	24%	20%	21%	24%	24%	22%	15%	12%
	17	13	19	13	10	12	8	19
Interest	6	6	10	9	7	7	7	7
Depreciation	13	13	15	14	15	15	16	16
Profit before tax	77	61	70	70	79	73	41	38
Tax %	30%	31%	33%	30%	32%	23%	22%	-79%
Net Profit	54	42	46	49	53	52	32	66
EPS in Rs	19.93	15.35	17.07	17.91	19.38	19.09	11.97	24.48
	Notes	Notes	Notes	Notes	Notes	Notes	Notes	Notes

Profit & Loss Consolidated Figures in Rs. Crores / View Standalone

	Mar 2008	Mar 2009	Mar 2010	Mar 2011	Mar 2012	Mar 2013	Mar 2014	Mar 2015	Mar 2016	Mar 2017	Mar 2018	Mar 2019	TTM
	575	758	849	895	1,143	1,232	1,099	1,107	1,258	1,279	1,308	1,376	1,477
	491	643	688	757	930	1,013	946	1,042	1,100	1,060	1,096	1,073	1,204
Operating Profit	84	116	162	138	214	219	153	65	159	218	212	303	274
OPM %	15%	15%	19%	15%	19%	18%	14%	6%	13%	17%	16%	22%	19%
	49	38	33	9	24	-2	6	13	20	26	44	62	48
Interest	28	32	22	21	24	24	22	24	29	27	33	31	28
Depreciation	38	39	40	45	48	51	54	42	56	51	55	55	62
Profit before tax	68	83	132	80	165	142	83	12	93	167	168	278	231
Tax %	24%	34%	33%	30%	31%	36%	32%	92%	39%	25%	29%	31%
Net Profit	56	55	77	58	109	84	52	-5	48	121	117	190	203
EPS in Rs	19.67	19.24	27.57	20.44	39.13	29.79	18.22	0.00	17.75	44.79	42.99	70.26	74.92
Dividend Payout %	27%	33%	21%	29%	20%	23%	26%	-167%	28%	22%	23%	14%

* Sales is net of excise duty and discounts

Compounded Sales Growth
10 Years:	6.14%
5 Years:	4.60%
3 Years:	3.03%
TTM:	7.32%

Compounded Profit Growth
10 Years:	13.01%
5 Years:	29.46%
3 Years:	58.01%
TTM:	6.61%

Stock Price CAGR
10 Years:	7.22%
5 Years:	22.35%
3 Years:	-8.50%
1 Year:	-17.74%

Return on Equity
10 Years:	12.20%
5 Years:	10.78%
3 Years:	14.47%
Last Year:	17.55%

Duration of recommendation: Short to Medium term.