Rajshree Sugar & Chemicals- Rs.69.00

Incorporated in 1985, Rajshree Sugars & Chemicals Ltd (RSCL) is one of the leading sugar producers in the South having interests across integrated fields such as sugar, distillery, power and biotechnology. It has two modern integrated sugar complexes located at Varadaraj Nagar in Theni District and Mundiampakkam in Villupuram District of Tamil Nadu, which produce plantation white crystal sugar of ISS grade S-30 with an ICUMSA less than 100. These factories have a combined milling capacity of 6000 TCD. RSCL is also engaged in a host of technology development activities such as sugarcane varietal development through plant tissue culture and production of eco-friendly bio-inputs like biofertilisers, biofungicides, biopesticides, biocontrol agents for parasites and predators of pests and pheromones.

The modernization of its sugar factory at Mundiampakkam was completed last year and the company is in the process of increasing its plant capacity from 3500 to 5000 TCD and thereby enhance its total capacity to 7500 TCD. This expanded capacity will be utilised from year crushing season i.e. 2005-06. Earlier in June’05 this year, the company commenced its new 22 MW co-generation power plant at Mundiampakkam. Currently, its bagasse based co-generation plants generate 34 MW of green power and after meeting its captive consumption, the surplus power of about 18 MW is sold to the state electricity grid i.e. TNEB. The Distillery unit at Varadaraj Nagar has a capacity of 45 kilo litres per day 40 KLPD enabling production of 12 million litres of alcohol per year. It manufactures various grades of alcohol such as Rectified Spirit and potable grade Extra Neutral Alcohol and Fuel Grade Anhydrous Alcohol for mixing with petrol to produce eco- friendly green fuel from renewable resources. RSCL has also established a 10,000 TPA organic manure production unit using state-of-the-art composting technology.

For FY05, the company registered 10% growth in Sales but its NP zoomed 85% to Rs.17 cr. due to higher price realization and lower interests cost and the company paid a dividend of Rs.3 on an EPS of Rs.7.50 representing a healthy dividend payout ratio of 40%. Considering the capacity expansion, firm sugar prices and increased sale of power and alcohol, RSCL is estimated to earn a NP of Rs.22 cr. on its total revenue of Rs.230 cr. Hence with an expected EPS of Rs.10 and dividend yield of around 5%, it is a value buy and can give handsome return in long run. Investors are strongly recommended to buy this scrip with a price target of Rs.110 (50% appreciation) in 12~15 months. Little surprise, therefore, that Smt. Rajshree Pathy, CMD, has constantly increasing her stake since a 1st April 2005.