Ace Investor Dolly Khanna Adds Stake in this Sugar Stock

As the Q2 results for 2023 roll in, retail investors are diligently examining the portfolios of seasoned investors.

Their diligent efforts are particularly relevant given the heightened turbulence in equity markets, a consequence of the ongoing conflict between Israel and Hamas.

The purpose of this thorough portfolio analysis is to extract invaluable insights into the intricate strategies and selections made by these seasoned investors throughout the preceding quarter.

For such retail investors, there is a piece of stock market news.

Ace investor Dolly Khanna recently added a sugar stock to her portfolio.

Who is Dolly Khanna?

Dolly Khanna is a Chennai-based investor who is known for picking lesser-known midcaps and smallcaps. She has been investing in stocks since 1996.

Dolly Khanna's portfolio, which is managed by her husband, Rajiv Khanna, is usually inclined towards more conventional stocks in manufacturing, textile, chemical, and sugar stocks.

In the most recent quarter, she bought a stake in these two companies.

Why did Dolly Khanna Buy this Sugar Stock?

The stock in question is Rajshree Sugar & Chemicals.

The latest shareholding pattern of Rajshree Sugar & Chemicals shows that Dolly Khanna has added a 1.1% stake in the company, respectively, as of September 2023.

Notably, in the June 2023 quarter, her name was missing from the list of shareholders.

This means perhaps they had a partial stake already and have now decided to double down or they could have bought the entire stake in the quarter gone by.

Dolly Khanna's stake is valued at Rs 19 million (m), with 347,035 shares.

While we don't know why she added shares of Rajshree Sugar & Chemicals, there are some reasons that we can guess.

Robust Financial Performance

Rajshree Sugar & Chemicals reported a strong set of numbers for the June 2023 quarter.

The company achieved impressive results, with net sales reaching Rs 2.3 bn, marking a 1.4% increase from the previous year's figure of Rs. 2.2.

Quarterly net profit surged to Rs. 85.3 m in June 2023, a substantial growth of 174.79% compared to the Rs. 114.1 m recorded in June 2022.

The EBITDA also saw remarkable improvement, at Rs. 187.2 m in June 2023, a remarkable surge of 3,566.67% from the Rs. 5.4 m reported in June 2022.

This exceptional performance can be attributed to an improved business outlook and escalating demand.

Rajshree Sugar & Chemicals has not only exhibited strength in the current quarter but has also consistently displayed strong financial growth over the years.

Over three years, the company achieved a remarkable compound annual growth rate (CAGR) of 28% in revenue, and the net loss decreased from Rs 158 m to Rs 90 m.

This impressive growth can be attributed to the company's successful sales expansion initiatives and a more favourable product mix.

Financial Snapshot (2021-23)

Particulars	21-Mar	22-Mar	23-Mar
Revenue (Rs bn)	3.6	4.7	7.7
Revenue Growth (%)	-	30.6	63.8
Net profit (Rs m)	-168	-32	-90
Net Profit Margin (%)	-4.6	-0.7	-1.2

Source: Equitymaster

Going forward, the company plans to enhance its operations, expand its product portfolio, and strengthen its position in the sugar and allied industries.

These plans are aligned with the company's vision to become a leading global provider of sustainable and value-added sugar products.

What Next?

The company is strategically poised to expand its product portfolio by embarking on ventures in previously unexplored market segments.

This deliberate diversification strategy serves as a proactive measure to reduce the company's exposure to the inherent cyclical nature of the sugar industry, effectively mitigating potential risks.

Presently, the anticipation of a supply crunch in the market has resulted in a sharp upswing in sugar prices. This price surge has proven to be highly advantageous for sugar producers, bolstering their financial standing.

Furthermore, the Indian government's ambitious ethanol blending program is creating an additional surge in demand for ethanol, a biofuel derived from sugarcane.

This surging demand not only enhances the profitability of sugar producers but also plays a pivotal role in reducing their reliance on traditionally unpredictable and cyclical sugar prices.

This shift in focus towards ethanol production aligns with the broader trend of sustainability and environmental concerns, further strengthening the company's position in the market.

How Shares of Rajshree Sugar have Performed Recently

The Rajshree Sugar stock rose around 54.9% in the past one year. Over a month, the share price has gone down by 4.8%.

Rajshree Sugar share price touched its 52-week high price of Rs 69.9 on 19 December 2022. Its 52-week low was Rs 32.1 touched on 28 March 2023.

The company is currently trading at a PB (price to book value) multiple of 15.7 times.

About Rajshree Sugar

The company manufactures and markets white crystal sugar and industrial alcohol with installed capacities of 6,000 tpd and 45 KL/day respectively.

Industrial alcohol is the raw material for a number of chemicals like acetic acid, acetic anhydride butanol, ethyl acetate, poly vinyl alcohol, and vinyl acetate.

The company has also been exploring various options in the sugar and allied industries in both areas within the country and overseas.

For more details, see the Rajshree Sugar company fact sheet and quarterly results.

You can also compare Rajshree Sugar with its peers:

Rajshree Sugar vs Rana Sugars

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services?here...