Shree Renuka Sugars, EID Parry, Balrampur Chini, Others Rally By 7-12%; Why Sugar Stocks Are Sweeter?

Sugar stocks witnessed a massive bull rally with Shree Renuka Sugars, Balrampur Chini Mills, Dalmia Bharat, EID Parry, Triveni Engineering, and DCM Shriram Industries among others skyrocketing between 7-12% on August 30, 2024. Four sugar stocks touched new 52-week highs, while others traded near their peak levels. The reason behind the sweetness in sugar stocks is due to the government's approval for using sugarcane juice and syrup for ethanol production.

Sugar Stocks On August 30:

Balrampur Chini Mills touched a new 52-week high of Rs 625.85 apiece, rising by 8.2% overall in the early trade of Thursday. At the same time, Dalmia Bharat Sugar & Industries surged the most with gains of 12.92% to hit a new 52-week high of Rs 499.2 apiece.

Further, EID Parry climbed by 7.5% to touch a new 52-week high of Rs 875.45 apiece, and lastly, Triveni Engineering & Industries soared by 10.22% to hit its new 1-year high of Rs 483.9 apiece.

Other stocks like Shree Renuka Sugars jumped by 9.8%, while DCM Shriram Industries zoomed by 6.3%, Bannari Amman Sugars advanced by 9.99%, Bajaj Hindustan Sugar rose by 9.72%, and lastly Andhra Sugars climbed by 8.81% in the early trade of BSE. These stocks are near their 52-week highs.

Why Sugar Stocks Are Rising On August 30?

The bullish trend comes after the government on August 29 declared to states that sugar mills and distilleries are allowed to produce ethanol from sugarcane juice, sugar syrup, B-Heavy Molasses, as well as C-Heavy Molasses during ESY 2024-25 as per the agreement or allocation with OMCs.

The development will come into effect from November 1, 2024. With this decision, sugar companies can produce ethanol without any limit earlier imposed in December 2023.

Last year, in December, the government banned the usage of sugarcane juice and sugar syrup for ethanol production in the supply year of FY24.

Hence, with no cap in place, this will enhance ethanol output in the country, and accordingly, the move is a key positive for sugar stocks.

The Department of Food and Public Distribution, in coordination with MoPNG, will periodically review the diversion of sugar to ethanol production vis-a-vis the production of sugar in the country so that the availability of sugar for domestic consumption is ensured throughout the year.

Earlier, in August, Suresh Gopi, the minister of State in the Minister Of Petroleum And Natural Gas, said that to achieve 20% ethanol blending target by ESY 2025-26, the Government has taken several measures which include a detailed Roadmap for Ethanol Blending in India; expansion of feedstock for the production of ethanol; remunerative price for procurement of ethanol under the EBP Programme; lowered GST rate to 5% on ethanol for EBP Programme; amendment in Industries (Development & Regulation) Act for free movement of ethanol across states for blending; interest subvention scheme for enhancement and augmentation of ethanol production capacity in the country; regular floating of Expression of Interest (EoI) by Public Sector OMCs for procurement of ethanol.

Gopi that time revealed that blending of ethanol with petrol further increased to more than 500 crore litres in ESY 2022-23 with corresponding increase in blending to 12.06%. During the current ESY 2023-24, the blending percentage has already crossed 13%.