Sukhjit Starch & Chemicals Limited — Investor Meet, 12-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** In Q2, Sukhjit Starch & Chemicals Limited reported revenue of INR 363.87 crore, up by 13% year-on-year, driven by increased sales volumes. EBITDA for the quarter reached INR 32.11 crore, with a profit before tax of INR 16.83 crore and a net profit after tax of INR 12.63 crore. For H1 FY25, total revenue was INR 753.70 crore, representing a strong 17% growth compared to the prior year. The company managed to reduce its long-term debt to approximately INR 79 crore, maintaining a low net debt to equity ratio of 0.14.

**Future Outlook and Growth Drivers:** Management emphasized strong demand in the FMCG and pharma sectors as key growth drivers. They are optimistic about market potential, particularly as India focuses on sustainable, biodegradable materials, such as maize starch. With gradual commissioning of expansion projects in Q3, they aim to refine their product portfolio and improve margins.

**Order Book and Operational Updates:** The company’s expansion strategy is on track, with a 400 TPD increase planned primarily through new product lines and debottlenecking measures. Management anticipates the benefits of this expansion to begin materializing in Q4 FY25.

**Analyst Q&A Insights:** Analysts questioned the company's capacity utilization and inventory management amid rising maize prices. Management clarified that they maintain approximately 2-4 months of inventory to stabilize operations and ensure supply continuity. They expect margin improvement in H2 due to enhanced production capacity and efficiency measures.

**Market or Regulatory Updates:** The conversation highlighted a growing international presence, particularly in Southeast Asia, where the company is making initial forays into exports.

**Strategic Focus Areas:** Sukhjit’s strategic focus remains strongly aligned with innovation and addressing market gaps, particularly in its FMCG and pharma strategies, to capitalize on improved operational capabilities.

**Investor Insight:** While the company exhibits robust financial health and a promising growth trajectory, caution is advised regarding potential volatility in raw material prices and competitive pressures. A "hold" stance appears appropriate as the market dynamics continue to evolve.