Shree Renuka Sugars (SHRS) has made its second Brazilian acquisition in the past four months, as it scouts for assets to secure raw sugar supplies for its 9,000TPD (Mar’ 11) domestic refining capacity. The company would invest US$329mn and acquire a controlling stake in Equipav S.A (Equipav) which works to EV of ~Rs1.5mn/TCD, expensive than the Rs0.7mn/TCD paid for VDI. Equipav has two sugar/ethanol mills with a combined capacity of 44,400TCD and co-gen capacity of 203MW. Funding is likely to include proceeds from QIP ~Rs5bn + preferential issue to promoters ~Rs2bn and internal accruals. The deal is subject to approval of debt restructuring by creditors and could close in the next 40 days. We remain positive on sugar prices as inventories remain at half of historic holding in Sep’ 11 and retain BUY on SHRS on attractive 4.8x F9/11 EV/E.