As a trend trading technical expert, I've analyzed the recent earnings conference call of E.I.D. Parry (India) Limited, and I'm excited to share my findings with you. The company's performance in the quarter and year ended March 31, 2024, has raised some concerns, but there are also some positive signs that investors should consider.
Global Sugar Market Trends
The global sugar supply surplus has decreased by 421,000 metric tons, and the annual growth of global sugar consumption is now estimated at 1.2%. This trend is expected to continue, driven by higher sugar consumption estimates in China and the EU. For India, sugar production has reached approximately 314 LMT, with an additional volume of 5-6 LMT expected from Tamil Nadu and Karnataka.
Company Performance
The standalone revenue from operations for the quarter ended March 31, 2024, was INR717 crores, registering a decline of 11% compared to the corresponding quarter of the previous year. Earnings before depreciation, interest, and taxes (EBITDA) for the quarter was INR166 crores, and standalone profit after tax was INR80 crores.
However, the company's sugar division operating performance was lower due to lower recoveries, higher cane costs, and no exports. The distillery business has also seen a change in product mix due to government policy. On the positive side, the refinery business has grown by 16%, and the spread has improved by $10 PMT, resulting in a cash profit of INR12 crores.
Technical Analysis
From a technical perspective, the current price of E.I.D. Parry (India) Limited is oscillating around the middle line of a long candle that formed on June 18th. This indicates a consolidation phase, which could be a buying opportunity for investors. Additionally, the price band predicted by the linear regression channel based on volume is showing a positive signal towards the trend.
The current CMP (Current Market Price) of Rs.775 is a good entry point for investors who are willing to take a medium-term view. The stock has been trading within a narrow range, and a breakout above the resistance level of Rs.800 could lead to a significant upmove.
Key Takeaways
Global sugar market trends are favorable: The decrease in global sugar supply surplus and the increase in sugar consumption estimates are positive signs for the industry.
Company performance is mixed: While the sugar division operating performance was lower, the refinery business has shown growth, and the company has forayed into the staples space.
Cost reduction and efficiency measures: The company has implemented cost reduction and efficiency measures, which have resulted in improved spreads and cash profits.
Technical analysis suggests a buying opportunity: The current price is oscillating around the middle line of a long candle, and the linear regression channel based on volume is showing a positive signal towards the trend.
Investment Opportunity
Based on the analysis, I believe that E.I.D. Parry (India) Limited presents a good investment opportunity for those who are willing to take a medium-term view. The company's exposure to the sugar industry, which is expected to benefit from global trends, is a significant advantage. Additionally, the company's efforts to reduce costs and improve efficiency are likely to pay off in the long run.
However, investors should be aware of the company's challenges in the sugar division, including lower recoveries and higher cane costs. They should also monitor the company's progress in the staples space and its ability to resolve certification issues in Europe.
Conclusion
E.I.D. Parry (India) Limited's recent earnings conference call has presented a mixed bag of results. While the company faces challenges in its sugar division, its exposure to the global sugar market and its efforts to reduce costs and improve efficiency make it an attractive investment opportunity.
Global Sugar Market Trends
The global sugar supply surplus has decreased by 421,000 metric tons, and the annual growth of global sugar consumption is now estimated at 1.2%. This trend is expected to continue, driven by higher sugar consumption estimates in China and the EU. For India, sugar production has reached approximately 314 LMT, with an additional volume of 5-6 LMT expected from Tamil Nadu and Karnataka.
Company Performance
The standalone revenue from operations for the quarter ended March 31, 2024, was INR717 crores, registering a decline of 11% compared to the corresponding quarter of the previous year. Earnings before depreciation, interest, and taxes (EBITDA) for the quarter was INR166 crores, and standalone profit after tax was INR80 crores.
However, the company's sugar division operating performance was lower due to lower recoveries, higher cane costs, and no exports. The distillery business has also seen a change in product mix due to government policy. On the positive side, the refinery business has grown by 16%, and the spread has improved by $10 PMT, resulting in a cash profit of INR12 crores.
Technical Analysis
From a technical perspective, the current price of E.I.D. Parry (India) Limited is oscillating around the middle line of a long candle that formed on June 18th. This indicates a consolidation phase, which could be a buying opportunity for investors. Additionally, the price band predicted by the linear regression channel based on volume is showing a positive signal towards the trend.
The current CMP (Current Market Price) of Rs.775 is a good entry point for investors who are willing to take a medium-term view. The stock has been trading within a narrow range, and a breakout above the resistance level of Rs.800 could lead to a significant upmove.
Key Takeaways
Global sugar market trends are favorable: The decrease in global sugar supply surplus and the increase in sugar consumption estimates are positive signs for the industry.
Company performance is mixed: While the sugar division operating performance was lower, the refinery business has shown growth, and the company has forayed into the staples space.
Cost reduction and efficiency measures: The company has implemented cost reduction and efficiency measures, which have resulted in improved spreads and cash profits.
Technical analysis suggests a buying opportunity: The current price is oscillating around the middle line of a long candle, and the linear regression channel based on volume is showing a positive signal towards the trend.
Investment Opportunity
Based on the analysis, I believe that E.I.D. Parry (India) Limited presents a good investment opportunity for those who are willing to take a medium-term view. The company's exposure to the sugar industry, which is expected to benefit from global trends, is a significant advantage. Additionally, the company's efforts to reduce costs and improve efficiency are likely to pay off in the long run.
However, investors should be aware of the company's challenges in the sugar division, including lower recoveries and higher cane costs. They should also monitor the company's progress in the staples space and its ability to resolve certification issues in Europe.
Conclusion
E.I.D. Parry (India) Limited's recent earnings conference call has presented a mixed bag of results. While the company faces challenges in its sugar division, its exposure to the global sugar market and its efforts to reduce costs and improve efficiency make it an attractive investment opportunity.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.