About The Company
Bajaj Hindusthan being the company headed by the most reputed BAJAJ group.The stock has been fairly fancied among the investors in the capital market. The financial results need to be studied with care before making any fresh position in this stock.
About The Results
Bajaj Hindusthan has posted its Q2 results for March 09 which has really disappointed or can be termed as flat. Optically it looks good, which is due to reversal of forex losses of Rs.83.66 crores provided earlier and now credited back to profit & loss account. On total income of Rs.516 crores,( including other income of Rs.91.07, which largely consist of forex gain referred above) PBT is at Rs.118.18 crores while PAT is at 81.39 crores. If we exclude this forex gain, PBT would have been at Rs.35.15 crores.
However major disappointment is from its sugar and distillery segment. The company, as at 30-09-08, had a closing stock of 35.56 lakh bags of sugar, valued at Rs.16.25 per kg., at Rs.578 crores. It is learnt that the company had crushed 64 lakh tonnes of sugarcane in the current season and has produced 57 lakh bags of sugar with a recovery of 8.9%. Part of opening stock, out of 35.56 lakh bags, were sold in Q1 and remaining quantity got sold in Q2. In Q1 average sugar realization was at Rs.17.75 per kg. while it was at Rs.20.60 per kg. in Q2. So, sugar segment earned an EBIT of about Rs.4.35 per kg. But this is not reflected in the results as its sugar segment had an income of Rs.408 crores and EBIT of just Rs.30.50 crores. Even distillery for Q2 had a turnover of Rs.38.63 crores and negative EBIT of Rs.1.19 crores which is surprising.
Considering overall results, the company being the largest sugar mill in the country with a capacity of 96,000 TCD, has really disappointed.
Major Drawbacks
1. Since, inventory of lower cost is now being replaced with higher cost, increase in stock, of Rs.338 crores for 6 months ending March 09 is also not very encouraging.
2. Rising interest cost also remains an area of concern.
About The Stock
The performance of the company is not suggesting to make any additional or fresh position in this counter at least before the results for the upcoming quarters gets better.
Disclosure: I do not have any personal holding in this stock.