While I share your disappointment, I do believe that Kushal was talking about the new harvest from Bihar and he stated that the benefit would accrue in the ‘coming quarters’ (we believed that it would be from Q4, we can say he should have specified that it won’t be in Q4).
We have to keep few things in mind
- Though the call was for Q3, it was being held when half of Q4 had already passed, Kushal had clearly highlighted that the current procurement cost was Rs 24.3, which is a jump of more than 10-15% as generally the procurement cost was Rs 21-22. That quantum of jump is by no means small. The price hike of Ethanol was around 9% while the cost increase was 10-15%.
[Edit: I think I understand why some investors consider that the cost hike was small and margins should have still been better as Ethanol prices increased by Rs. 5.9 while maize price increased by ‘just’ Rs 2.5-3.5. We need to think in % terms rather than absolutes, specially when 1 Kg maize doesn’t produce 1 ltr of Ethanol] - Compare BCL performance with its peer Gulshan Poly (in distillery segment), BCL has done better in terms of margins consistently. Even their margins were subdued because of raw material pressure.
- Agree, other than additional revenue from new 100KLPD coming online this quarter, there are no other ‘triggers’, but if the current price is below its fair price, that could itself act as trigger and once (if/when) some bigger players start entering and the price starts showing momentum, retail will also start piling on which they are now leaving for a broken company/stock.
Disclosure: Invested since 3-4 yrs and pyramiding. Not a buy/sell reco. Just sharing my thoughts here.
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