NEW DELHI: Shares of Shree Renuka Sugars Ltd slipped to their 52-week low of Rs 36 on Monday after the company reported a net loss of Rs 620 crores in the September quarter hit by foreign exchange losses on account of acquisition of mills in Brazil.
The company's performance was also affected because of higher interest cost, which rose to Rs 192.5 crore during the quarter ended September 30. In the same period last year, interest stood at Rs 117.7 crore.
Bank of America has downgraded Shree Renuka Sugars to 'Underperform' from 'Buy' and cut its target price to Rs 38 from Rs 88, citing earning miss in September quarter due to delayed turnaround of Brazilian operations.
"We have cut our target price driven by a cut in EPS for FY12 to a loss of Rs 4.3 per share from a profit of Rs 9.5 per share and cut in EPS for FY13 to Rs 3.2 per share from Rs 11.6/share," said BofA-ML in a report on Sunday.
"Subdued sugar price along with higher cost of cane in Brazil as well in India and excess debt will hurt earnings and stock performance," said the BofA report. "We expect global raw sugar price to remain at around current level of UScent 25 per pound as production surplus of sugar globally will rise by 6mt next one year compared," added the report.
In a separate note Morgan Stanley has also downgraded the stock to 'equal-weight' from 'underweight' and cut the target price to Rs 42 from Rs 57 citing potentially lower international sugar prices and slower balance sheet deleveraging.
Kotak Institutional Equities said in a note , "We have reduced our earning estimates for FY2012E and FY2013E led by lowering of earning estimates in Brazilian subsidary Renuka do Brasil and higher debt.
"Company has consistently disappointed in the Brazilian business in the last couple of quarters. Net debt has shown no improvement in 2HFY11. We would like to see improvement in net debt and operating results for a positive view on the company," added the Kotak report.
Kotak downgraded the stock to 'REDUCE' from 'BUY' with a revised target price of Rs 55 from Rs 75 earlier.
At 12:55 p.m., shares of Shree Renuka were at Rs 38.50, down 25.5 percent. The stock has hit a low of Rs 36 in early trade. For the year the stock has plunged over 50% on the Bombay Stock exchange (BSE).
VIVEK KUMAR
PGDM IIIrd Sem
The company's performance was also affected because of higher interest cost, which rose to Rs 192.5 crore during the quarter ended September 30. In the same period last year, interest stood at Rs 117.7 crore.
Bank of America has downgraded Shree Renuka Sugars to 'Underperform' from 'Buy' and cut its target price to Rs 38 from Rs 88, citing earning miss in September quarter due to delayed turnaround of Brazilian operations.
"We have cut our target price driven by a cut in EPS for FY12 to a loss of Rs 4.3 per share from a profit of Rs 9.5 per share and cut in EPS for FY13 to Rs 3.2 per share from Rs 11.6/share," said BofA-ML in a report on Sunday.
"Subdued sugar price along with higher cost of cane in Brazil as well in India and excess debt will hurt earnings and stock performance," said the BofA report. "We expect global raw sugar price to remain at around current level of UScent 25 per pound as production surplus of sugar globally will rise by 6mt next one year compared," added the report.
In a separate note Morgan Stanley has also downgraded the stock to 'equal-weight' from 'underweight' and cut the target price to Rs 42 from Rs 57 citing potentially lower international sugar prices and slower balance sheet deleveraging.
Kotak Institutional Equities said in a note , "We have reduced our earning estimates for FY2012E and FY2013E led by lowering of earning estimates in Brazilian subsidary Renuka do Brasil and higher debt.
"Company has consistently disappointed in the Brazilian business in the last couple of quarters. Net debt has shown no improvement in 2HFY11. We would like to see improvement in net debt and operating results for a positive view on the company," added the Kotak report.
Kotak downgraded the stock to 'REDUCE' from 'BUY' with a revised target price of Rs 55 from Rs 75 earlier.
At 12:55 p.m., shares of Shree Renuka were at Rs 38.50, down 25.5 percent. The stock has hit a low of Rs 36 in early trade. For the year the stock has plunged over 50% on the Bombay Stock exchange (BSE).
VIVEK KUMAR
PGDM IIIrd Sem
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