Synopsis: The shares of key sugar companies such as Avadh Sugar and Energy, Shree Renuka Sugars, Dhampur Sugar, and Balrampur Chini Mills witnessed a significant surge following the Modi government’s decision to allow sugar mills and distilleries to manufacture Rectified Spirit (RS) and Extra Neutral Alcohol (ENA) from sugarcane juice and B-Heavy Molasses (BHM).
On Monday, sugar stocks gained attention in early market trading after the Modi government made a landmark decision to grant sugar mills and distilleries the authority to manufacture Rectified Spirit (RS) and Extra Neutral Alcohol (ENA) from sugarcane juice and B-Heavy Molasses (BHM).
This move is aimed at supporting the sugar industry’s diversification efforts by enhancing its flexibility to produce ethanol and alcohol-based products.
Among the top gainers were Avadh Sugar and Energy, Shree Renuka Sugars, Dhampur Sugar, and Balrampur Chini Mills.
In early trading, Avadh Sugar and Energy saw a jump of 4.89%, bringing its stock price to Rs. 773 on the NSE.
The company’s market capitalization increased to Rs. 1,521 crore. Meanwhile, Dhampur Sugar witnessed a 5.32% rise, with its stock price climbing to Rs. 216 on the BSE, pushing its market cap to Rs. 1,469 crore.
Similarly, Shree Renuka Sugars’ shares increased by 4.38%, with its price reaching Rs. 48.66 on the BSE, boosting its market cap to Rs. 10,357 crore.
Magadh Sugar and Energy also saw an upward trajectory, with its stock price rising by 3% to Rs. 872.45, and its market capitalization increasing to Rs. 1,224.56 crore.
Shares of Balrampur Chini Mills rose by 3%, reaching Rs. 575.85, and its market cap surged to Rs. 11,683 crore.
This rally in sugar stocks comes in response to the announcement by the Department of Food and Public Distribution (DFPD) on September 13, which is expected to offer significant growth opportunities to sugar companies through increased ethanol production.
The policy also reflects the government’s broader goal of boosting ethanol output, a critical component of India’s ethanol-blending program aimed at reducing oil imports and enhancing energy security.
The sugar industry has long been seeking flexibility in ethanol production, as it allows sugar mills to switch between sugar and ethanol production based on market demand and profitability.
On December 15 last year, an earlier order by the DFPD had restricted sugar mills from diverting sugarcane juice and BHM for the production of RS and ENA.
The new order reverses this restriction, giving sugar mills the ability to make better use of available resources.
In addition to this development, the government has lifted a previous ban, allowing the sale of up to 23 lakh tonnes of rice from the Food Corporation of India (FCI) stocks to grain-based ethanol distilleries.
This move is also expected to enhance ethanol production and improve supply to meet the country's growing ethanol demand during the Ethanol Supply Year (ESY) 2024-25.
In conclusion, the government's recent policy changes have provided a major boost to the sugar industry by increasing flexibility in ethanol production and enabling better use of resources like sugarcane juice and molasses.
This has resulted in a positive market response, with stock prices of major sugar companies like Avadh Sugar, Dhampur Sugar, and Shree Renuka Sugars seeing a significant rise.
The long-term impact of these decisions is expected to support the industry's efforts towards diversification, thereby making the sector more resilient and profitable.
Disclaimer: The information provided in this article is for informational purposes only and should not be taken as investment advice. Readers are encouraged to consult with a certified financial advisor before making any investment decisions.
.jpg)