Surging on the multiple triggers, including an increase of ethanol blend in fuel, the sugar companies’ stocks are on the roll. The majority of these companies are gaining up to 10 per cent on the BSE intraday trade on Thursday.  

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Individually, Uttam Sugar Mills surged the most by 10 per cent, along with Shree Renuka Sugars that hit an upper circuit of 10 per cent. Besides, Balrampur Chini Mills, Dalmia Bharat Sugar, and Industries, Triveni Engineering each gained between 7-10 per cent on the BSE intraday today. 

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While other sugar stocks such as EID Parry, Avadh Sugar, Dhampur Sugar and Dwarikesh Sugar were up in the range between 4.5-6.5 per cent on the BSE intraday trade.  

Another reason for these stocks are on roll is mainly on the expectation that for at least the next one year the sugar prices at both domestic and global levels to be firm, on the back of lower inventories. 

The sector has seen a steep decrease in sugar inventory in the last one year, which along with the increasing sugarcane diversion towards ethanol is leading to increasing in sugar prices.  

According to the CARE Ratings report, the sugar industry has already exported around 7.1 MT in 2020-21 running on the highly remunerative global prices. 

And, the favourable export dynamics are expected to prevail over the FY22 with the expected dip in the Brazilian production due to poor cane crop and reduced crushing capacity in that country, the report further said. 

Sugar industry is well poised to benefit from domestic and global factors, said the CARE Ratings report, “Tight global demand-supply situation, favourable government policies and continuous push for higher blending will keep the inventory levels under control and sugar prices firm.” 

Besides, the shortfall in global sugar production has resulted in a sharp increase in global prices of sugar to over 19 cents/lb, which is likely to sustain, and players are expected to continue exports without any incentives as well, the rating agency said in its report while analysing the sector.