Dhampur Sugar

Dhampur Sugar Mills reported a challenging FY25 with consolidated revenue from operations at INR2,656.4 crores, a marginal increase of 0.36% YoY. However, profitability saw a significant decline, with PAT dropping 61.04% to INR52.4 crores and EBITDA falling 36.16% to INR187.3 crores. This was primarily due to a 22% drop in overall cane crush and restricted ethanol feedstock. The fourth quarter (Q4 FY25) showed signs of recovery, with revenue growing 21.46% YoY to INR810.3 crores and EBITDA increasing 1.79% to INR102.5 crores, indicating a potential turnaround.

The sugar segment crushed 28.49 lakh tons of sugarcane in FY25, a 22% decline from the previous year, mainly due to red rot disease and lower yields. Despite this, the sugar season '24-'25 saw a marginal increase in crushing compared to '23-'24, suggesting the worst is over. Sugar contributed 56.5% to FY25 revenue and 28.1% to EBIT. The company is undertaking intensive cane development programs, including varietal shifts, to improve yields, with major impacts expected from FY27. The problematic CO238 variety is targeted to reduce to 48% in Rajpura and 65% in Dhampur by FY26, and below 10% in both areas within two years.

The ethanol segment faced significant headwinds in FY25, with its contribution to the profit mix plummeting from 48.2% to 13.3%. This was largely due to lower sales volumes caused by government restrictions on using sugarcane syrup and B-Heavy molasses for ethanol production. Total ethanol production for FY25 was 678.37 lakh liters, with 45% coming from maize. For FY26, the company expects higher ethanol production, leveraging its full maize plant operations to compensate for sugarcane-based feedstock limitations. However, management noted that margins from maize-based ethanol are lower, and transfer pricing changes have also impacted profitability.

The power segment demonstrated robust growth, with its revenue contribution increasing from 8% to 9.9% in FY25 and its EBIT contribution rising from 33% to 49.3%. This performance is set to improve further with a retrospective power tariff increase of approximately INR0.82 per unit effective from April 1, 2024. The potable spirits business also saw strong growth, with production increasing to 8.27 lakh cases in Q4 FY25 from 4.95 lakh cases last year, driven by the commissioning of two new tetra pack lines. Potable spirits' contribution to EBIT rose from 2.6% to 9.5% in FY25.

Dhampur Sugar Mills announced a buyback of equity shares up to a total consideration of INR20 crores, signaling a commitment to shareholder returns. The company has no major capex plans for FY26, as its plants are fully set up. Management expressed caution regarding the FY26 profitability target of INR150 crores, deeming it a 'stretch' due to inherent uncertainties in the sugar business. The company's focus remains on cane development and improving recovery rates, with the full benefits of these initiatives anticipated from FY27.