AAKASHAYA PATRA EXCLUSIVE STOCK FOR INVESTMENT: 08.08.2020

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PONNI SUGARS (ERODE) LTD

CMP 175 ENTRY 168 TO 170 STOPLOSS 145 TARGET 240++ TIME: 12 MONTHS

Ponni Sugars (Erode) Limited is a public limited company,incorporated under the Companies Act, 1956 and domiciled in India. It is an associate of Seshasayee Paper and Boards Limited. It has a sugar factory at Erode having a capacity to crush 3500 tonnes of sugarcane per day and generate 19 MW of power. With an equity capital of Rs.8.60 crore and reserves of Rs.238.86 crore,PSL's share book value works out to Rs.287.80. The promoters hold 42.36% of the equity capital, FPIs hold 21.17% (Normally FPIs are not buying shares of below Rs.200 crore market cap so it is very good sign) which leaves 36.47% stake with the investing public.

For Q1FY21, PSL reported 908% higher PAT of Rs.5.04 crore on sales of Rs.61.46 crore and an EPS of Rs.5.86. During FY20, its PAT grew 267.02% to Rs.30.94 crore against Rs.8.43 crore in FY19 on 67.98% higher sales of Rs.310.49 crore fetching an EPS of Rs.35.98.Company has reported highest ever sales in FY20 and highest operating profit and net profit after FY10.

At CMP, PSL trades at PE ratio of just 4.25x earnings. It paid 10% dividend for FY18, 20% dividend for FY19 and declared 40% dividend for FY20.

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