Инвесторы оценили акции Davangere Sugar Industries как перспективную сделку с потенциалом роста на 234%

New Delhi [India], August 24: Davangere Sugar Industries Ltd (BSE: 543267) has emerged as a potential high-risk, high-reward opportunity, with an investor note assigning a BUY rating and a target price of ₹10, implying a potential upside of around 234% from the cited current market price of ₹2.99. The note carries a 12–18 month investment horizon and highlights improving operating performance, favourable sugar-market conditions, promoter participation and potential overseas ethanol opportunities as key factors behind the bullish view. Sugar prices and lower inventories support the outlook According to the investor note, domestic sugar prices have reached a seven-year high, with retail sugar prices cited at around ₹65 per kg, while the sugar season 2025-26 production estimate has been cut to 309 lakh tonnes from an earlier estimate of 343 lakh tonnes. Closing sugar stocks are also cited at a nine-year low of approximately 41 lakh tonnes. The note further points to tighter stockholding norms for bulk consumers and potential changes relating to ethanol diversion as factors that could influence sugar realisations. The report argues that these market conditions could improve the profitability of sugar production relative to ethanol, creating a favourable environment for sugar companies if realisations remain firm. Revenue growth points to improving operating momentum Davangere Sugar has already reported strong revenue growth, according to the note. Q4 FY26 revenue stood at ₹83.8 crore, up 47.3% year-on-year, while Q1 FY27 revenue was ₹35.2 crore, representing 43.5% YoY growth. The report describes the volume and pricing improvement as visible, while identifying margin expansion as the next potential leg of the recovery. The note’s financial estimates project revenue rising from ₹238.8 crore in FY26 to ₹310 crore in FY27E and ₹375 crore in FY28E. EBITDA is estimated to increase from ₹50.7 crore in FY26 to ₹75 crore in FY27E and ₹95 crore in FY28E, while PAT is projected to rise from ₹8.5 crore to ₹22 crore and ₹35 crore over the same period. Promoter participation could strengthen investor confidence Another factor highlighted in the report is the proposed conversion of approximately ₹40.11 crore of unsecured promoter loans into warrants, with the note citing a proposed warrant price in the ₹3.77–₹3.82 range. Following conversion, the promoter stake is expected to increase from 41.6% to around 45.7%. The report interprets the transaction as promoter participation at a price close to the prevailing market level. However, the note also flags that different disclosures have cited varying warrant terms and recommends reconciliation of the final terms before investors take positions. Overseas ethanol opportunity provides additional optionality The company is also highlighted for its proposed overseas expansion through its UK subsidiary, Aurevant Global. The investor note cites an investment of approximately US$84.95 million, funded from earlier FCCB proceeds, with the vehicle intended to pursue opportunities in global ethanol and sugar-related businesses. If successfully executed, the proposed expansion could provide Davangere Sugar with exposure beyond its existing domestic operations. At the same time, the report identifies the transaction as a key risk area and points to the corporate-guarantee and share-pledge structure associated with the proposed overseas deployment. ₹10 target based on FY28 earnings potential The investor note presents multiple valuation scenarios. Its bear case target is ₹2, assuming the sugar cycle weakens and the company trades at a lower sales multiple. The base case target is ₹6, while the bull case target is ₹10, based on sustained sugar realisations and potential capacity additions through Aurevant, alongside an estimated FY28 EBITDA of approximately ₹95 crore. A blue-sky scenario of ₹15 is also mentioned if the company develops a broader offshore ethanol platform and receives a significant valuation re-rating. Key risks investors should watch Despite the bullish thesis, the report highlights several risks. A potential increase in sugar production during the 2026-27 season could put pressure on sugar prices if cane availability improves and the monsoon remains favourable. The note also flags governance and disclosure-related concerns, particularly differences in the reported warrant terms, as well as risks associated with the proposed offshore transaction. Liquidity is another important consideration given the company’s micro-cap profile and the potential for significant price slippage while entering or exiting positions. (The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)