The shares of sugar companies sweetened as they zoomed up to 20% on Monday, for the second day in a row. Rajshree Sugar & Chemicals (up 19.98%), Sakthi Sugars (up 19.86%), Dhampure Speciality Sugars (up 11.40%) Simbhaoli Sugars (up 19.86%), and Dalmia Bharat Sugar and Industries (up 15.68%), quoted higher.
Food Secretary Sanjeev Chopra told news agency Reuters that the government would consider allowing additional sugar exports under the quota system in January after assessing local production. This led to heavy volumes in sugar stocks.
India’s sugar production has been increasing structurally over the past few years, due to an improvement in sugarcane yields. However, the demand growth has remained modest at 1% to 2% annually, resulting in high inventory levels.
The sugar industry is an agro-based industry and an essential commodity. It is prone to India’s erratic monsoon and is a capital-intensive business. It faces high levels of government intervention that can change its dynamics.
In November, the government allowed the export of 60 lakh tonnes of sugar for the marketing year 2022-23 (October-September). India exported a record 111 lakh tonnes of sugar in the marketing year 2021-22.
Dhampur Sugar Mills, KCP Sugar & Industries, Ugar Sugar, Avadh Sugar, Mawana Sugars, KM Sugar Mills and Vishwaraj Sugar Industries are a few other sugar stocks gained on Monday.
Analysts at ICICI Securities said that sugar production in India is expected to be 36.5 MT after diverting 4.5 MT of equivalent sugar for ethanol. The country consumes 27.5 MT of sugar, which means that it is likely to be left with 9 MT which may be exported.
Written by Simran Bafna
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