With few exceptions, agribusiness , still underrepresented in the Brazilian capital market, did not experience one of the most promising harvests on the B3 in 2025. And this scenario has continued into the beginning of this year.
In this context, the sugar and ethanol sector has suffered the most. But it is precisely in this field that Itaú BBA sees a slightly more favorable outlook for Jalles Machado .
The bank is initiating coverage of the sugar and ethanol company with a buy recommendation and a target price of R$4 per share by the end of 2027, implying a potential appreciation of 36% compared to the current share price.
“We see Jalles Machado as a more protected company compared to the average in the sugar and ethanol sector at this time, despite the challenging short-term scenario, marked by lower investor appetite and a less favorable price environment,” wrote analysts at Itaú BBA.
In its report, Itaú BBA highlighted that this relative outlook within the sector is explained by the combination of excellent operational efficiency and a more resilient revenue base, driven by the organic sugar segment and longer-term hedging positions.
In detail, the bank highlights three factors that underpin Jalles Machado's future profitability. Starting precisely with operational efficiency, which it classifies as one of the company's greatest competitive advantages in a sector dominated by commodities.
In one example of this, analysts point out that the company has consistently achieved a yield of one ton of sugarcane per hectare (TCH) higher than the average for the Central-South region, a result of both its favorable geographic location and the intensive use of irrigation.
"In Goiás, approximately 60% of sugarcane areas already have irrigation (with 100% of critical areas covered), and continuous investments are being directed to expand this infrastructure in Minas Gerais as well," the bank notes.
A second key pillar is Jalles Machado's ability to extract value from products that deviate from the traditional logic of commodities, particularly in the organic sugar business.
According to Itaú BBA, the technical and operational know-how acquired by the company creates significant barriers for new entrants, since the category demands more rigorous agricultural control, higher industrial standards, specific technologies, and a longer interval between the start of operations and the final sale.
Another positive factor, analysts point out that organic sugar has its own price dynamics, independent of the conventional sugar cycle. They add:
"This means that periods of global decline in sugar prices tend to have less impact on Jalles' revenue, providing greater protection, lower volatility, and more stable cash flow over time."
In a third and final aspect, Itaú BBA cites that the Jalles Machado unit in Santa Vitória (MG) represents a significant vector for value creation for the company in the coming years, both through new projects, such as the expansion of irrigation, and through improvements in the overall efficiency of the plant.
In this scenario, despite highlighting that cash generation from operations remains limited in the short term, the bank sees potential for a compound annual growth rate of adjusted operating income of 25% between 2026 and 2030.
In Itaú BBA's view, this growth will be sustained mainly by increased capacity utilization at the unit and the consequent normalization of consolidated margins – which reinforces its constructive outlook for the investment and its relative preference compared to its sector peers.
Founded in Goianésia (GO), in 1980, Jalles Machado went public on the B3 in February 2021. At the time, the group ended a nearly eight-year hiatus without an IPO in the sugar and ethanol sector and, with its shares priced at R$ 8.30, raised R$ 741.5 million, being valued at over R$ 3 billion.
The company's shares were trading down 2.04% around 3:35 PM on the B3 stock exchange, quoted at R$ 2.88. In twelve months, the company's shares, valued at R$ 868.4 million, have accumulated a depreciation of 37.2%.
