Avadh Sugar

Oudh Sugar Mills has posted excellent numbers for Q2FY17, continuing with its good run of Q1. The company’s net sales rose 31% (YoY) at Rs.330 crore. Costs vis-à-vis the revenue came down from 96% to 84%. An improved topline and better costs helped boost the EBITDA by a whopping 307% to Rs.61 crore. Margins have showed a tremendous jump up from 5.98% to 18.48%.

The company ended the quarter with a net profit at Rs.19 crore, compared to a loss of Rs.19 crore in previous Q2 and status quo when compared to Q1FY17 net profit of Rs.19 crore. Its H1FY17 net profit was at Rs.38 crore v/s Rs.6 crore in FY16- indicating a bumper year. After making losses consistently, the company has turned around and hopefully this trend will continue through this fiscal.

Globally the sugar season 2015-16 has witnessed a fall in sugar production after continuous 5 years of surplus production, thereby correcting the imbalance in the demand and supply position. The fall in production has reduced inventories to a balanced level. After five years of surplus sugar production in India coupled with aggressive sugar export strategy, domestic sugar production in sugar season 2015-2016 was marginally lower vis-à-vis domestic consumption and has consequently resulted in an improvement in domestic sugar prices. The crushing season has begun and we could see Oudh and other sugar companies enjoying better price realisations.