The Indian government has imposed a 50% export duty on molasses, a key ingredient in ethanol production, to ensure enough supply to achieve its ambitious ethanol blending target.
This move comes amidst concerns about lower sugar production due to a weak monsoon and the need to prioritize domestic consumption of sugar.
The new duty discourages molasses exports while encouraging its use in ethanol production, helping to meet the 20% blending target. The government hopes to reach its E20 (20% ethanol blended gasoline) target by 2025-26, up from the current 12%.
India is the world’s largest molasses exporter with 25% of global trade, but the government wants to keep that molasses within the country to boost ethanol production, which helps reduce the oil import bill and promotes cleaner fuel.
Here are some ethanol stocks that might affect on 50% export duty
Balrampur Chini Mills Ltd
On Tuesday the share price closed 0.33% up at ₹ 392.60 per share from its previous close of ₹ 391.30 with a market capitalization of ₹7,920 Crores.
Balrampur Chini Mills Ltd, with a sugar crushing capacity of 77,500 Tons of Cane per Day and a distillery capacity of 560 kiloliters per day. In FY 2021-22, the company exported ₹17.7 crore liters of ethanol, a by-product of molasses, contributing to its revenue growth.
Despite a 10 MT sugar export restriction, the company’s sugar exports surged by 26.1% to 2.5 lakh tonnes in the same fiscal year. With plans to exceed ₹1500 Cr litre ethanol capacity by 2025-26 from the current ₹684 Cr litres.
Dhampur Sugar Mills
Dhampur Sugar Mills Ltd, a key player in molasses-based products, faces potential challenges with a ban on molasses exports. With a distillery capacity of 350 KLD and plans to reach 22 crore liters by FY24, the company heavily relies on ethanol production.
The share price of the company closed 1.18% up at ₹266 per share from its previous close of ₹262.90 on Tuesday.
Dhampur Sugar Mills has a market capitalization of Rs 1,770 crores, and the share price of the company rose by 13% in the last year.
Triveni Engineering and Industries Ltd.
On Tuesday the share price closed 0.52% down at ₹333.15 per share from its previous close of ₹334.90 with a market capitalization of ₹7,280 Crores.
Triveni Engineering and Industries Ltd, As a major Indian sugar company with a crushing capacity of 61,000 TCD and a distillery capacity of 660 KLD, the ban on molasses exports could disrupt ethanol supply and pricing.
The company, holding a sugar export quota of 6.15 million tonnes, achieved Q1FY23 sugar exports of 14,531 tonnes out of a total quota of 2,04,868 tonnes.
Dwarikesh Sugar Industries
Dwarikesh Sugar Industries has aggressively exported sugar and used higher global white sugar prices. During FY22, the company exported 15.99 lakh quintals of sugar.
Dwarikesh Sugar Industries has a market capitalization of Rs 1,610 crores and the share price of the company closed 0.41% down at ₹85.60 per share from its previous close of ₹85.90 on Tuesday.
Dalmia Bharat Sugar and Industries Ltd
DBSIL is a fully integrated sugar company with a cane crushing capacity of 37,150 tonnes crushed per day (TCD), a distillery capacity of 710 kilolitres per day (KLPD), and a co-generation capacity of 126 megawatts (MW).
On Tuesday the share price closed 0.18% down at ₹399.20 per share from its previous close of ₹ 399.90 per share.
Dalmia Bharat Sugar and Industries Ltd has a market capitalization of Rs 3,230 crores, and the share price of the company rose by 6% in the last year.
EID Parry (India) Ltd.
As of FY 2022-23, the company has six sugar factories with the capacity to crush 40,300 tonnes of cane per day and generate 140 MW of power, as well as five distilleries with a capacity of 417 KLPD.
On Tuesday the share price closed 0.24% up at ₹581 per share from its previous close of ₹579.60 per share.
EID Parry (India) Limited has a market capitalization of Rs 10,300 crores, and the share price of the company rose by 25% in the last six months and 7 percent in the last year.
Written by Sriram KV
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