Ethanol: India’s economy is the fastest-growing country and population. This will be associated with air pollution and the high importation of oil. So the government has taken an alternative solution for using fossil fuels to bioethanol. It is a biofuel produced from various crops such as sugarcane, corn, rice, wheat and biomass.

In India, the ethanol sector is an important player in the energy market, which helps economic growth and environmental sustainability. It helps reduce dependency on fossil fuels and increases focus on renewable energy.

Ethanol Industry in India

Ethanol fuel started being used in 1900 to reduce pollution. In 1970, India started making ethanol from sugar cane. Later in 2000, the Indian government started supporting ethanol to be used as a renewable fuel. Ethanol production and consumption have been increasing slowly. It is viewed as a cleaner and more sustainable alternative. It is rising because of increased demand for biofuel and alcoholic beverages.

Ethanol has a lower carbon intensity, so this traditional fuel has reduced carbon emissions, aligning with India’s climate goals. The government has supported ethanol blending. The Indian government supports incentives, subsidies and grants for investment in ethanol production infrastructure. This will stimulate public and private sector interests and improve production & outputs. 

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Ethanol expansion helps to reduce dependence on foreign oil and mitigate the environmental impacts of pollution. This will also promote to increase in crop production and provide an extra revenue source for the former. It contributes to rural development growth and the expansion of ethanol markets.

The government’s announcement of 20% ethanol blending for petrol by 2025 so that India will need to produce around 1016 crores of liters of ethanol, and the rollout of E20 fuel in 13,500 retail outlets and flex-fuel vehicles from 2023 has provided a boost to the industry. This will help to improve fuel efficiency, reduce emissions and improve engine performance.

The India ethanol market had a valuation of $6512.27 million in FY23.  The valuation growth of ethanol is expected to grow at a compound annual growth rate of 8.84% until 2029. It will reach a market valuation of $10456.98 million in the financial year 2029.

In FY24, India’s overall ethanol production was 9850 million liters, including sugar-based ethanol of 6000 million liters and grain-based ethanol of 3830 million liters. Further upcoming growth in the financial year 2025 will be 31.03% and overall production of 12880 million liters, including sugar-based ethanol of 6600 million liters and grain-based ethanol of 6280 million liters. In FY26, the ethanol production capacity will be expecting to increase from 12,880 million liters to 13,440 million liters and grow by 4.35%. 

Process of Ethanol Production

Ethanol production involves fermenting sugars from biomass, such as corn or sugarcane, with yeast, yielding ethanol and carbon dioxide. After fermentation, ethanol is distilled to purify it. The resulting ethanol can be used as a biofuel or in various industrial applications.

Top Listed Indian Ethanol Companies

EID-Parry (India)

EID-Parry was Established in 1788, over 225 years It is one of the oldest surviving companies in India. The company is involved in the manufacture and marketing of sugar and by-products, nutraceuticals and ethanol production. The company has 7 sugar plants in south India. 

Operation and Expansion

The company had an ethanol production capacity increase from 237 KLPD* in FY22 to 417 KLPD in FY23 and the revenue of the ethanol business is 644 crores. The company is expected to expand its capacity in the financial year 2023-24 will be 582 KLPD. In Q1 FY25, capacity expansion projects at Haliyal (120 KLPD) and ongoing at Nellikuppam (45 KLPD). The overall blending is 12% in FY24. The company is expected to have a distillery capacity of 18 crore liters. The company’s distillery revenue is growing by 22%. It had an overall revenue of 35% in FY24.

Financial metrics of EID-Parry (India)

The key financial metrics of EID-Parry (India) are given below

ParticularsAmountParticularsAmount
CMP₹708.05Market Cap (Cr.)₹12,590
EPS (TTM)₹50.68Stock P/E (TTM)13.99
ROE (TTM)12.75%ROCE (TTM)28.03%
Promoter Holding (%)42.23%FII Holding (%)8.85%
Debt to Equity0.25P/B Ratio1.78
Operating Profit Margin8.49%Net Profit Margin5.59%

Shree Renuka Sugars

Shree Renuka Sugars was Established in 1995, the founders are Narendra Murkumbi & Vidya Murkumbi. The company manufactures and refines sugar, ethanol, ethyl alcohol, power generation and sale of power. It is a subsidiary of Wilmar Group. It is one of the biggest ethanol and sugar refiners in India. The company’s green energy business includes producing ethanol for blending into gasoline and generating electricity. The company operates 6 sugar mills to process sugarcane, produce sugar and its by-products are ethanol and power.

Operation and Expansion

The company has reported ethanol production has increased by 19.02% from 1,64,837 KL to 1,96,197 KL in FY23. The company has supplied 1749 million liters of ethanol, which blended 11.58% in FY23. The company’s ambition of ethanol blending will be 20% by FY25. The company has a capacity expansion of ethanol from 750 KLPD to 1250 KLPD, such projects are Munoli Distillery, from 120 KLPD to 500 KLPD,  Athani Distillery, from 300 KLPD to 450 KLPD and Havalga Distillery will be 300 KLPD.

Financial metrics of Shree Renuka Sugars

The key financial metrics of Renuka sugar are given below

ParticularsAmountParticularsAmount
CMP₹44.48Market Cap (Cr.)₹9,050
ROE (TTM)43.62%ROA (TTM)6.17%
Interest Coverage Ratio0.74ROCE (TTM)10.35%
Promoter Holding (%)62.48%FII Holding (%)3.36%
Debt to Equity4.03Current ratio1%
Operating Profit Margin7.13%Net Profit Margin-2.16%

Triveni Engineering & Industries

Triveni Engineering & Industries was Established in 1932, over 91 years ago. It is an Indian diversified conglomerate in sugar, ethanol and engineering areas. The company is the top 3 highest manufacturer in India for sugar and the 2nd largest supplier of ethanol. The company operates in sugar and alcohol including ethanol, power co-generation and power transmission.

Operation and Expansion

The company has reported total ethanol production of 95,768 KL and total ethanol sales in the distillery product mix of 90% in FY23. The company’s ethanol production from B-heavy molasses is 83%. The capacity of ethanol production is to be 520 KLPD, Such projects are Muzaffaranagar distillery-MZN at 160 KLPD, Sabigarh distillery-SBT from 160 KLPD to 200 KLPD and Milak Narayanpur distillery at 160 KLPD.

Financial Metrics of Triveni Engineering & Industries

The key financial metrics of Triveni Engineering & Industries Limited are given below

ParticularsAmountParticularsAmount
CMP₹369.75Market Cap (Cr.)₹8,069.67
EPS (TTM)₹18.05Stock P/E (TTM)20.42
ROE (TTM)13.62%ROCE (TTM)13.42%
Promoter Holding (%)60.98%FII Holding (%)4.91%
Debt to Equity18.05P/B Ratio2.8
Operating Profit Margin11.19%Net Profit Margin7.56%

Balrampur Chini Mills

Balrampur Chini Mills was Established in 1975. It is one of the largest sugar manufacturing companies in India. It is the first sugar company in the country to diversify its business from sugar to distillery and cogeneration. The company is also operating a wide range of co-products ranging from molasses, alcohol, ethanol, and bagasse to power generation.

Operation and Expansion

Balrampur Chini Mills Limited has a crushing sugar cane capacity of 80,000 TCD and it has increased by 16%. The company’s distillery sales increased by almost 37% to 27.07 Cr. BL and production increased by 30.25% to 27.99 Cr. BL in FY24. The distillery revenue increased from 1,164 crores in FY23 to 1689 crores in FY24, and it has grown by 45.10% compared to FY23. The distillery’s revenue is contributing to revenue by 21.06%. The company distillery capacity will be 1050 in FY24, including Balrampur distillery from 160 KLPD to 330 KLPD and Maizapur distillery is 320 KLPD.

Financial Metrics of Balrampur Chini Mills

The key financial metrics of Balrampur Chini Mills Limited are given below

ParticularsAmountParticularsAmount
CMP₹417.95Market Cap (Cr.)₹8,176.9
EPS (TTM)₹26.49Stock P/E (TTM)15.30
ROE (TTM)15.72%ROCE (TTM)15.26%
Promoter Holding (%)42.90%FII Holding (%)11.27%
Debt to Equity0.59P/B Ratio2.47
Operating Profit Margin14.29%Net Profit Margin9.08%

Bajaj Hindusthan Sugar

Bajaj Hindusthan Sugar was Established in 1931, over 92 years ago, and the founder is Jamnalal Bajaj. It is one of Asia’s top sugar producers and the world’s 5th integrated sugar company. The company is involved in the manufacture and marketing of sugar, industrial alcohol, ethanol and the generation of power. The company runs 14 sugar plants, all of which are in UP, including 6 manufacturing plants for distilleries.

Operation and Expansion

Bajaj Hindusthan Sugar has a crushing sugar capacity of 1,36,000 tons per day and an alcohol distillation capacity of 800 kiloliters per day. The annual production of ethanol produced by the company is 38 million liters. The company has increased its ethanol production capacity to approximately 218 million liters annually in response to the growing demand for ethanol.

Financial Metrics of Bajaj Hindusthan Sugar

The key financial metrics of Bajaj Hindusthan Sugar are given below.

ParticularsAmountParticularsAmount
CMP₹36.25Market Cap (Cr.)₹4,631.7
ROE (TTM)1.93%ROA (TTM)0.55%
Interest Coverage Ratio0.41ROCE (TTM)0.80%
Promoter Holding (%)24.95%FII Holding (%)2.57%
Debt to Equity0.86Current ratio0.59
Operating Profit Margin1.09%Net Profit Margin-1.42%

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Other Ethanol Company Stocks

Stock Name CMP (Rs)Market Cap (Cr.)P/E
Bannari Amman Sugars Ltd₹2,577.00₹3,279.0121.53
Dalmia Bharat Sugar & Industries Ltd₹404.80₹3,264.7111.98
DCM Shriram Industries Ltd₹221.00₹1,874.6816.25
Dhampur Sugar Mills Ltd₹236.75₹1,555.7911.58
Dwarikesh Sugar Industries Ltd₹74.65₹1,399.4616.74
Uttam Sugar Mills Ltd₹344.75₹1,296.959.81
Avadh Sugar & Energy Ltd₹607.40₹1,179.199.20

Conclusion

We are in the parts of conclusion, the ethanol industry has seen significant growth and development in recent years, driven by government initiatives and increasing demand for renewable energy. The Indian government announced a 20% ethanol blending in petrol by 2025. It leads to increased investment in ethanol production and blending capacities. Further, It helps to grow the ethanol stock. Overall, the ethanol industry is poised for further growth and development, pushed by government support and rising demand for renewable energy.

Written by Nikhill Naik

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