Davangere Sugar Company's Q2 Profit Doubles, Revenue Surges 22.5%

Davangere Sugar Company has reported a robust performance for the second quarter, with significant growth in both revenue and profitability.

Financial Highlights

Net Profit: Doubled to ₹26.30 crore from ₹12.90 crore year-on-year
Revenue: Increased by 22.5% to ₹481.90 crore from ₹393.30 crore
EBITDA: Grew to ₹153.70 crore from ₹146.10 crore
EBITDA Margin: Compressed to 31.89% from 37.15% in the same period last year

Segment-wise Performance

The company's performance across different segments is as follows:

Segment	Revenue (₹ in crore)	Profit/Loss before tax and interest (₹ in crore)
Sugar	387.89	498.40
Aviation	28.59	9.71
Distillery	4,402.78	838.12
Others	57.72	-

Key Observations

Distillery Segment Dominance: The distillery segment emerged as the primary revenue driver, contributing ₹4,402.78 crore to the total revenue.
Sugar Segment Performance: Despite lower revenue, the sugar segment showed a significant profit of ₹498.40 crore.
Aviation Segment Growth: The aviation segment, while smaller, demonstrated profitability with a positive contribution to the company's results.
Margin Pressure: The compression in EBITDA margin from 37.15% to 31.89% suggests increased operational costs or pricing pressures in the market.
Balance Sheet Strengthening: The company's balance sheet shows an increase in total assets to ₹77,317.90 lakh as of September 30, up from ₹74,256.93 lakh on March 31.
Equity Expansion: There has been a substantial increase in the paid-up equity share capital to ₹14,299.91 lakh from ₹9,408.45 lakh.

The company's performance reflects its ability to navigate market challenges while capitalizing on opportunities across its diverse business segments. The significant growth in net profit, despite a compressed EBITDA margin, suggests effective cost management and potentially favorable market conditions in key segments.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-0.80%	+0.81%	+4.18%	-2.86%	-35.63%	-59.04%

Davangere Sugar Company Limited (DSCL), a fully integrated sugar, ethanol, and renewable power manufacturer based in Karnataka, has announced a rights issue of up to ₹149.22 crore and recently held a virtual meeting with analysts and institutional investors. These developments signal the company's focus on growth and transparency in its operations.

Rights Issue Details

DSCL is proposing a rights issue of up to ₹149.22 crore at ₹3.05 per equity share. The rights entitlement ratio is set at 13 shares for every 25 shares held. The issue is scheduled to open on August 14, 2025, and close on August 29, 2025. The company intends to use the proceeds for loan repayment and general corporate purposes, which could potentially enhance its profitability by reducing debt burden.

Virtual Investor Meeting

On August 19, 2025, DSCL conducted a virtual group meeting with analysts and institutional investors from 4:00 PM to 5:00 PM, which included a Q&A session. The company assured that no unpublished price-sensitive information was shared during the interaction, maintaining compliance with regulatory requirements.

Company Overview

DSCL operates with the following capacities:

Sugar production: 4,750 TCD (Tonnes Crushed per Day)
Ethanol production: 65 KLPD (Kilo Litres Per Day)
Co-generation power: 24.45 MW

The company's manufacturing facility is spread across 165 acres in Kukkuwada, Karnataka, strategically located within a sugarcane cultivation belt of 30,000 acres and supported by a network of around 5,000 farmers.

Financial Performance

For the fiscal year 2025 (FY25), DSCL reported:

Metric	Amount (in lakhs)
Revenue	21,498.53
EBITDA	5,227.90
PAT (Profit After Tax)	1,083.11

Expansion Plans

DSCL has outlined several growth initiatives:

Expanding ethanol capacity from 65 KLPD to 85 KLPD, with plans for further expansion in coming years.
Increasing sugarcane cultivation by 15,000 acres to strengthen its raw material supply chain.
Maximizing ethanol output during off-crushing seasons to optimize capacity utilization.

Operational Highlights

The company's integrated business model encompasses sugar production, ethanol manufacturing, and power generation. In FY25, DSCL:

Crushed 1.82 lakh MT of sugarcane
Achieved a sugar recovery rate of 8.87%
Produced 1.73 crore liters of ethanol
Generated 2.56 crore KWh of power

Sustainable Practices

DSCL emphasizes sustainability in its operations:

Operates a zero-waste approach with effluent treatment and by-product recovery
Utilizes bagasse-based energy for a circular economy model
Plans to set up a 35 TPD CO₂ plant to convert emissions into food-grade CO₂ and dry ice

Market Position

The company is well-positioned to benefit from India's growing ethanol market, which is expected to reach USD 10.07 Billion by 2033, growing at a CAGR of 14.40% from 2025 to 2033. This growth is supported by government initiatives promoting ethanol blending in petrol, which reached the 20% target in 2025, five years ahead of the original schedule.

As Davangere Sugar Company Limited moves forward with its rights issue and expansion plans, it aims to capitalize on the favorable industry trends and government policies supporting the sugar and ethanol sectors in India. The company's integrated operations and focus on sustainability position it well for future growth in the evolving market landscape.