Downloaded from: justpaste.it/4i7kq
Sugar shares in demand; Balrampur, Dalmia Bharat rally over 30% in a month Balrampur Chini Mills hit a new high of Rs 273 on Thursday, rallying 9 per cent on the BSE in intra-day trade
Shares of sugar companies continued their upward march on Thursday. In the past one month, Balrampur Chini Mills, Dalmia Bharat Sugar and Triveni Engineering have moved up in the range of 30 per cent to 43 per cent on expectation of improved earnings. In comparison, the S&P BSE Sensex was down nearly 4 per cent during the same period.
With the government’s aggressive stance on increasing ethanol blending with petrol to levels of 20 per cent by 2025, the industry is undertaking huge capacity expansion programmes to meet the ethanol requirement of 10 billion litre by 2025, analysts say. This distillery capacity addition to utilise the B-Heavy & sugarcane juice route to produce ethanol, would be earnings accretive after the significant increase in ethanol prices in last two years, they believe.
Analysts at JM Financial Securities, for instance, suggest India’s sugar sector has drifted away from cyclicality (in terms of sugar prices) as well as from partial deregulation. It is fully regulated now and is likely to remain so in the foreseeable future, they said in a recent note. "This has been led by structural oversupply in terms of sugar production (from swinging between 22-30mnt to 30mnt plus except in case of drought years in Maharashtra and Karnataka), the government’s efforts on the Ethanol Blending Program (EBP; from 0.8 per cent to almost 8 per cent now; 20 per cent target EBP in 2025) through robust ethanol prices (especially B-Molasses and Sugarcane juice routes, which are indirectly linked with sugar prices) and the government’s objective to ensure sugarcane farmers are paid without significant arrears," the brokerage firm said in sugar sector update. Among individual stocks, Balrampur Chini Mills hit a new high of Rs 273 on Thursday, rallying 9 per cent on the BSE in intra-day trade. In the process, the stock surpassed its previous high of Rs 272.05 hit on April 15. In the past one month, it has zoomed 34 per cent.