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Thursday, October 23, 2008

Ponni Sugars (Erode) Rewards Rnvestors

Ponni Sugars (Erode) is the first sugar company to post results for quarter ending September 08. Since majority of sugar majors have September as their year ending, those companies will be posting the results by December 08.

Ponni Sugars is a small company but its current results throws a light on the expectations of other sugar results. Total income of the company during the quarter is at Rs.33.76 crores against Rs.40.26 crores in the corresponding quarter of previous year. PAT for the quarter is at Rs.3.10 crores (against a loss of Rs.2.39 crores) and a net loss of Rs.1.88 crores in FY 08. This is after booking Rs.1.65 crores, being increase in cane price, effective from 1st October 07.

During the quarter, the company issued 40 lakh equity shares at Rs.50 per share, by converting preference share capital, due to which paid up equity of the company rose to R.8.60 crores.

EPS of the company for the quarter is at Rs.3.64 while for H1 of FY 09, it is at Rs.2.50. This is because; the company had its bottomline in red for June 08 quarter, at Rs.1.02 crores.

It may be noted that sugar prices were firm during July – September 08, quarter and hence all the companies are going to present healthy results. However, from mid September, sugar prices have started softening and the trend is likely to remain the same till end of calendar year, as crushing season would be starting soon in Maharashtra and U.P. But due to lower production of about 20 million tonnes expected in season 08 – 09, sugar prices would rise form March 09.

Considering this, all the sugar stocks, which have been virtually ruling at its 52-week low, are looking good as the sector can be outperformer on 12 – 18 months call.

Ponni Sugars though a very small player can also be able to reward the investors from its current levels.
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