Update: Additional incentive of Rs 3.71 per litre on ethanol produced from damaged foodgrains and maize, has been announced by OMCs. This is in addition to the recent price hike of Rs 4.7 provided on Ethanol produced from damaged foodgrains and Rs 6.01 from maize. This hike is effective from Aug 7 just like the previous hike.
According to me, most of this hike will directly flow to the bottom line (profits) as the Management has mentioned during the quarterly call (prior to the latest hike) that they can deliver 15-18% EBIDTA. With this Rs 3.71 hike, the margins (EBITDA & PAT) should improve further. I believe that it is a step in the right direction by Govt to encourage Ethanol from grains like Maize rather than water-guzzling sugarcane and rice.
Disc: Invested
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