Ponni Sugars (Erode) Ltd, Shree Renuka Sugars Ltd, Avadh Sugar & Energy Ltd, Bajaj Hindusthan Sugar Limited, Dwarikesh Sugar Industries Ltd and Sakthi Sugars Ltd led gainers at sugar pack, rallying up to 16 per cent in Friday's trade, after the government removed sugar diversion cap for ethanol production, allowing distilleries to participate in rice auctions.
A total of 34 of 35 listed sugar stocks were trading higher today as the government notification suggested sugar mills will be allowed to use cane juice or syrup to produce ethanol in the new marketing year starting November 1. The world's second-biggest sugar producer had imposed restrictions on diverting sugar for ethanol production in December 2023 in a bid to increase sugar output after cane crop was hit by below-average monsoon rains, Reuters reported.
Dalmia Bharat Sugar and Industries Ltd climbed 9.27 per cent to hit a high of Rs 483.10. KCP Sugar & Industries Corporation Ltd surged 10.14 per cent to Rs 59.30. Shree Renuka Sugars advanced 8.27 per cent to Rs 51.30. Bajaj Hindusthan Sugar Ltd was up 8.15 per cent at Rs 44.06. Balrampur Chini Mills also climbed 6.63 per cent to Rs 617. Triveni Engineering & Industries was trading 7.68 per ecnt higher at Rs 472.75.
"The Union government has removed the cap on sugar diversion for ethanol production for ESY2025 (November 01, 2024-October 31, 2025). This is expected to support the increase in ethanol blending with petrol (EBP) closer to the target of 20 per cent for the year and higher than the estimated 14% in ESY2024. Further, this will help curtail the closing sugar stock for SY2025 and to maintain sugar prices at reasonable level, thereby supporting the profitability of sugar mills and enabling timely payment to farmers," Girishkumar Kadam, Senior Vice President & Group Head of Corporate Ratings at ICRA.
Additionally, the Department of Food and Public Distribution (DFPD) has allowed grain-based distilleries to participate in the e-auctions by Food Corporation of India (FCI) for rice procurement of up to 23 Lakh MT. "This will support the increase in ethanol blending and also the profitability margins of multi-feed/grain-based distilleries since FCI rice is available at a lower rate and provides higher yield compared to damaged food grains (DFG) or maize," Kadam said.
Ugar Sugar Works soared 9.48 per cent to Rs 91.16. Rane Sugars jumped 7.99 per cent to Rs 23.52. Mawana Sugars added 7.99 per cent to Rs 135.80. Rajshree Sugars gained 7.89 per cent to Rs 79.21. In the new season, distilleries can also use B-heavy molasses, a byproduct with higher sucrose levels, for ethanol production, the government said in the notification. Around 750,000 metric tons of B-heavy molasses are lying in stock with mills after the government restricted ethanol production from this feedstock last year. Now that the restriction is lifted, they can use these stocks, Reuters reported.
Magadh Sugar & Energy Ltd climbed 10.65 per cent to Rs 975. Avadh Sugar & Energy, Dhampure Speciality Sugars and Sakthi Sugars added 7 per cent each.