The Indian government is on the verge of blending 20% ethanol into automotive gasoline to minimize reliance on foreign exchange. As a result, the Indian ethanol sector has had strong growth in recent months, attaining a 10% ethanol blending rate five months ahead of schedule.
However, to meet the government’s blending target, greater ethanol production capacity is required so many sugar companies have increased their ethanol capacity to enjoy higher benefit of margin growth.
Fundamentally strong companies possess strong financials, such as a low debt-to-equity ratio, considerable profit growth, and consistent cash flow. Such companies are more likely to endure and emerge stronger from market downturns.
Here are the three Fundamentally strong Ethanol Stocks under Rs 100
Ugar Sugar Works Ltd
Ugar Sugar Works is a micro-cap stock with a market capitalization of Rs 918 crore. On Friday, Company shares were trading at Rs 81.60 a share, down 0.12 percent from the previous close of Rs 81.70.
Ugar Sugar Works has an ethanol production capacity of 800 kiloliters per day (KLPD) which was gradually increased from 250 KLPD.
Ugar Sugar Works Ltd’s revenue has increased by 58 percent year on year, from Rs 1,137 crore in FY 21-22 to Rs 1,794 crore in FY 22-23. During the same period, net profit has jumped by 140 percent from Rs 43 crore to Rs 103 crore.
As of the recent financial year, the company’s margins have improved with a net profit margin of 5.74 percent and an operating margin of 10.96 percent. Similarly, the return on equity stood at 46.66 percent and the return on capital employed at 52.43 percent.
According to a recent shareholding pattern, the company promoters hold a 44.34 percent stake in the company, Foreign institutional investors hold 3.62 percent and retail investors hold a 52.03 percent stake.
Indian Sucrose Ltd
Indian Sucrose is a micro-cap stock with a market capitalization of Rs 144 crore. On Friday, Company shares were trading at Rs 82.92 a share, up 1.32 percent from the previous close of Rs 81.84.
Indian Sucrose Ltd has installed an ethanol capacity of 120 KLPD alongside a sugar factory.
Indian Sucrose Ltd’s revenue has increased by 2 percent year on year, from Rs 443 crore in FY 21-22 to Rs 452 crore in FY 22-23. During the same period, net profit has fallen by 19 percent from Rs 37 crore to Rs 30 crore.
As of the recent financial year, the company’s margins have improved with a net profit margin of 6.64 percent and an operating margin of 14.85 percent. Similarly, the return on equity stood at 16.51 percent and the return on capital employed at 28.25 percent.
According to a recent shareholding pattern, the company promoters hold a 64.49 percent stake in the company and retail investors hold a 35.47 percent stake.
Kothari Sugars & Chemicals Ltd
Kothari Sugars & Chemicals is a micro-cap stock with a market capitalization of Rs 439 crore. On Friday, Company shares were trading at Rs 53 a share, up 0.38 percent from the previous close of Rs 52.80.
Kothari Sugars and Chemicals is an integrated sugar company with units at Kattur and Sathamangalam in Tamil Nadu. The company has a combined sugar capacity of 6,400 TCD. It also has a distillery capacity of 60 KLPD and a total power co-generation capacity of 33 MW.
Kothari Sugars & Chemicals revenue has increased by 44 percent year on year, from Rs 422 crore in FY 21-22 to Rs 609 crore in FY 22-23. During the same period, net profit has increased by 24 percent from Rs 34 crore to Rs 42 crore.
As of the recent financial year, the company’s margins have improved with a net profit margin of 6.87 percent and an operating margin of 9.03 percent. Similarly, the return on equity stood at 16.27 percent and the return on capital employed at 19.06 percent.
According to a recent shareholding pattern, the company promoters hold a 73.53 percent stake in the company and retail investors hold a 24.97 percent stake.
Written By Omkar Chitnis
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