Published: 06th Aug 2024
By: Value Research
The Murugappa Group firm had a dismal FY24 as its core sugar segment’s operating profit plunged 85%. Yet, the stock has zoomed 25% since its result was announced on May 24, 2024.
Adverse climate hit sugarcane output, impacting EID’s exports. Its ethanol output was also impaired as the government restricted the biofuel’s production.
The market is unfazed by the setbacks due to EID’s strategic move to expand into premium segments like brown sugar and food staples like rice, dal and millets.
The move into staples is to ultimately foray into high-margin ready-made products like idli dosa batter, whose market is valued between Rs 1,500-4,000 crore.
Coromandel International, in which EID holds a 56% stake, recently announced diversifying into the CDMO sector, boosting market optimism and lifting EID as well.
There are threats that risk EID’s rally. Its plans for the new ventures have some loopholes. Its stake in Coromandel is another risk. Read all the pitfalls in our story from the link below.