Q1EPS 18.73: MOST UNDERVALUED SUGAR STOCK

_Combo of Sugar, TyreCord, Fine Chemicals, API_

DCM SHRIRAM *IND* LTD: TP 700
BseCode 523369 (10FV)

Rationale for Recommendation:

1. Diversified Product range
2. Highly profitable Boom in All divisions
3. *FY17 EPS 70*
4. *FY18EEPS 77*

DSIL is diversified conglomerate engaged in production of SUGAR, TYRECORD, API, FINE CHEMICALS

A. _Daurala Sugar_ : One of the oldest sugar Mills and well-known name in U.P., sugar factory produces Premium Packages Sugar, Sugar Cubes, Sugar Sachets and Pharma grade Sugar. Also has 45000 KL distillery to produce Liquor, ENA

B. _Shriram Rayon's_ : Again one of the oldest and most well known name in Tyre industry, produces Rayon Tyre Yarn/Cord/Fabrics and Nylon yarn
C. _Daurala Organics_: This division produces Organic/Inorganic Chemicals and Drug Intermediates

             FY17.  FY16

Sales. 1506.    1216

PBT.        152     40

PAT.         122      34

Equity.    17.40

EPS Rs *70.19. 19.60*

DSIL reported exceptionally good nos forFY17 with NP of 122cr vs 34cr. Such performance was possible not only due to boom in sugar prices but TYRECORD division too performed much better due to robust demand from tyre industry and improved performance of Chemicals. In fact, *tyre cord industry has become seller mkt with strong pricing power*

_Finance cost is just 2% of Sales which should come down further with increased earnings_

                  FY18E

Sales.    1550

NP.          134

EPSRs.    77.   

DSIL is available at extremely attractive Valuations:

1) *Tdg @ 4.40xFY17eps*

2) *Avlbl @ 4.10xFY18Eeps*

3) BValue Rs 210

Even if DSIL gets modest PERATIO of 9, stock should be 700

( *We repeat Bse code no is  523369*)