Why D-Street is not worried about this sugar company's poor FY24 show

The market seems to have taken EID Parry's poor FY24 show in stride. The stock has swelled 25 per cent since May 24, 2024, when the company announced its annual and quarterly results. The rally occurred despite the core sugar segment's operating profit declining 85 per cent in FY24. EID Parry, which is among the market leaders of the packaged sugar industry, saw its sugar business hit in FY24 as adverse climate conditions affected sugarcane production and weighed on its export revenue. The company's ethanol production was also impacted as the government barred companies from producing the biofuel to keep sugar prices in check. So, why is the market still bullish on the Murugappa Group company? Besides the prospects of a favourable monsoon and better sugarcane prices in India and Thailand this year, there is much more to the ongoing rally. Let's explore the factors driving the optimism: Expanding the addressable market: EID Parry is pulling out all stops to solidify its position in premium segments like brown sugar and others in the FMCG industry. In its Q4 FY24 earnings call, the company laid out its plans to expand i