Below Rs 50 share: 100% jump in Q4 profit! This sugar stock offers 47% upside, says Systematix

Despite a challenging FY25, Systematix Institutional Equities has revised upward its target price on a sugar stock on bright outlook for FY26, suggesting a 47 per cent potential upside ahead. The stock has lost 31 per cent of its value in the past one year due to reduced cane availability and elevated production costs. 

Systematix Institutional Equities said the UP-based sugar manufacturer is poised for recovery in FY26 with rebound in crushing volumes, improved sugar realisations, varietal replacement bolstered by crop protection strategies, and strong farmer engagement.

This is Dwarikesh Sugar Industries Ltd. The stock closed at Rs 49 on Friday. Systematix suggested a target price of Rs 72 on the stock. 

"The robust performance in 4QFY25 offered a sense of optimism to DSIL. As these initiatives continue to gain momentum, we remain confident in DSIL’s ability to restore operational efficiency and drive recovery in the SS 2025-26 season. DSIL currently trades at an inexpensive FY27E P/E of 7.6 times and EV/Ebitda of 5.1 times," Systematix Institutional Equities said.

The domestic brokerage retained its 'Buy' call on the stock with a revised SoTP- based TP of Rs 72 from Rs 70 earlier, based on 11.3 times P/E and 6.9 times EV/Ebitda for FY27E.

Systematix Institutional Equities said  Dwarikesh's PAT soared 102 per cent YoY in Q4, 9 per cent above its estimate. The company also benefited from swapping part of its export quota (10k tonnes) with domestic sales during 4QFY25, enabling higher margin realisation, it said. 

Systematix Institutional Equities noted that the Dwarikesh's management is optimistic about a significant increase in crushing volumes during SS (Sugar Season) 2025-26 and expects to fully regain momentum by SS 2026-27. 

"We cut FY26E/FY27E revenue by 19 per cent/6 per cent, which factors in likely lower cane crush. However, higher sugar realisation and tighter cost control have led us to raise EBITDA margins by 197bps and 138bps for FY26/FY27E," it said.

It cut its FY26 Ebitda and PAT estimates by 3-14 per cent due to sharper cut in revenue while raising the same for FY27E by 2.6-6.4 per cent, respectively.