Stocks of Mawana Sugars and Dwarikesh Sugars reached record highs on Wednesday. The shares of these companies gained in the midst of turbulent markets as shares of sugar companies were in demand.
Operations margins of sugar companies are expected to improve with a favourable mix of ethanol towards B-heavy/juice (feedstock) coupled with higher sugar realisations.
The sugar industry is about to have a mega transformation as it has emerged as a potent driver of clean energy.
Shares of Balrampur Chini Mills rallied 4% on Thursday’s Intraday Trade and hit a record high of ₹462. The share price of this company has surged 23% when compared to a 3.3% rise on the S&P BSE Sensex.
Shares of Mawana Sugars rallied 20% to reach their 52-week high of ₹ 152.45. The shares are currently trading at ₹ 141.55 apiece. The stock gained 46.76% since February 24, 2022, when the Russia-Ukraine conflict escalated.
Shares of Dwarikesh Sugar Industries Ltd. reached their 52-week high of 128.80. The stock zoomed more than 40% in eight days and is currently trading at 117.95. In the last 5 days, the stock has outperformed the markets as it surged by 25%.
Most sugar stocks were trading higher as markets recouped. Some of the top gainers in Thursday’s early trade were:
| Stock | Increase |
| DCM Shriram Industries | 9.31% |
| Rajshree Sugars & Chemicals | 4.95% |
| Dharani Sugars & Chemicals | 4.90% |
| Bajaj Hind | 4.81% |
| Sakthi Sugars | 4.50% |
| Rana Sugars | 4.49% |
| Dhampur Sugar Mills | 2.69% |
It is expected that the operating margins of sugar companies will improve as the demand for ethanol is on the rise. It is expected to rise with an estimated compounded annual growth rate of 15% over FY22-30, as the Government is promoting ethanol-blended fuels.
Sugar inventory is high in India and conversion of cane towards ethanol will reduce the problem of surplus and reduce business volatility. It will improve profitability, reduce working capital and ensure superior cash flows, as per a Business Standard report.
“Based on the opportunities arising from ethanol and bioenergy, the sugar sector appears to be powering forward on a sustainable growth path (25 per cent CAGR), which would drive a shift in how it is perceived and eventually spur its re-rating,” an analyst at Systematix Shares and Stocks (India) said in its sugar sector report.
