Buzzing: 3 Sugar Stocks with ‘Highest’ Profit Margins!

The sugar space has become the go-to sector for investors in the last few days who are looking for some quick returns. The government is planning to increase the export quota for sugar companies for the marketing year 2022-2023 which bolstered the prices of these sugar stocks quite fast. Many of these stocks even hit 20% circuits on account of a buying frenzy, therefore going long at the current rates might not be a suitable idea from the risk perspective. 

However, keeping a tab on some of the best sugar companies in the sector can prove to be worthwhile in case investors get a chance to participate in this rally at a lower level. In that vein, here are 3 sugar companies that are operating at the highest profit margins (as per FY22) in the sector.

Vishwaraj Sugar Industries Limited

Vishwaraj Sugar Industries Ltd (NS:) has other verticals apart from sugar manufacturing such as making alcoholic spirits by distillation, blending and bottling of Indian-made foreign liquor (IMFL), and generation of power. The company has a market capitalization of INR 387 crores and currently trades at a P/E ratio of only 6.45, compared to the sector’s average of 50.76.

In FY22, the company clocked the highest-ever revenue of INR 470.27 crores, which is even higher than its total market cap. Surprisingly, net income jumped over 626% YoY to INR 60.16 crores in FY22, compared to a profit of INR 8.28 crores in FY21, translating into a net profit margin of 12.79%, which is the highest among all the companies in the sugar space. 

Ponni Sugars (Erode) Limited

Ponni Sugars (Erode) Ltd (NS:) is a sugar manufacturing company with a market capitalization of INR 375 crores. It trades at a P/E ratio of 12.85 and is also a regular dividend-paying company, with a yield of 1.26%. On the financial front, it has been increasing its net income at a yearly rate of 12.94%, over the last 5 years, with the FY22 profit being INR 29.25 crores.

The company was able to secure a net profit margin of 9.9% in FY22 and over the last three years, margins remained above 9.7%. To further boost the confidence in this stock, FIIs own a healthy 23.21% stake in the company, which has increased from 21.17% in September 2021.

Triveni Engineering and Industries Limited

The last stock on the list and the largest one is Triveni Engineering and Industries Ltd (NS:) which has a market capitalization of INR 7,116 crores. The FY22 revenue figure dipped a bit to INR 4,372.27 crores, from INR 4,706.45 crores a year ago, despite which there was a healthy growth of 20% in EBIDTA, from INR 590.49 crores to INR 709.02 crores in the same period.

This further resulted in a YoY net profit jump of 43.9% to INR 424.05 crores, which is the highest figure since FY14, at least. While in FY21, the net profit margin dipped to 6.26%, it rose to 9.7% in FY22. It’s intriguing, that the net profit margin on a TTM basis is exponentially high, at 27.22%!