High imports (~87% of expected production) combined with a 12% rise in output will compensate for the steep drop in sugar inventories expected in SY10.
Dhampur Sugar Mills’ (DSM) sale volumes are set to rise ~28% and together with the expected uptick in realizations will drive revenue growth of 76.4% and almost three-fold rise in PAT to Rs1.6 billion in SY10.
Lower leverage and improving return ratios are added positives. We have a target of Rs149 for BHL based on a P/E of 5x on FY10E. We recommend BUY.