Sugar shares extend gain; Dwarikesh Sugar, Dhampur Sugar hit 52-week high

Oudh Sugar, Thiru Arooran, Upper Ganges, Ugar Sugar and Mawana Sugars were up 5%-7%.

Shares of sugar companies continued their upward journey, gaining by up to nearly 50% in past two weeks.

Oudh Sugar Mills, Dhampur Speciality Sugars, Thiru Arooran Sugars, Upper Ganges Sugars, Ugar Sugar Works and Mawana Sugars were up between 5% and 7% on the BSE as compared to 0.11% decline in the S&P BSE Sensex.

Dhampur Sugar Mills, Dwarikesh Sugar Industries, Indian Sucrose and KM Sugar Mills were hit their respective 52-week highs in intra-day trade on Monday.

Since December 21, sugar prices have increased by 3% from Rs 37.51 to Rs 38.69 per kg in the due to anticipated shortage of sugarcane supply from Maharashtra and Karnataka.

The rating agency ICRA expects domestic sugar production to decline to 23.0 million MT during sugar year 2017 (SY2017), a decline of around 9% over the previous year. This is largely on account of lower cane availability in Maharashtra and Karnataka due to poor monsoons last year.

Although the monsoons are likely to be better this year, the impact on the cane output is likely to be seen only in SY2018, given the growing period (12 months) of sugarcane.

Going forward, the profitability of the mills is dependent on the control over operating expenses and the control over interest expenses by appropriate leveraging. Sustained healthy realisations and healthy recovery rates likely to result in healthy contribution margins for UP-based mills, despite a Rs 25/qtl increase in the cane price for SY2017, the rating agency said in recent report.

In ICRA’s view, sugar prices are expected to remain firm in the near term, given the tight stock position. With the Fair and Remunerative Price (FRP) of cane for SY2017 fixed at the same level as of the previous year and sugar prices on higher side, the profitability of mills based in Maharashtra and Karnataka is likely to improve, however, the extent of increase in absolute levels of profits could be moderated with the decline in the cane availability in these regions.

	Price on BSE in RS			Gain in %
COMPANY	26/12/2016	06/01/2017	LTP	1 day	2-wk
UTTAM SUG.MILLS	47.40	69.40	70.55	1.66	48.84
UGAR SUGAR WORKS	23.00	32.05	33.65	4.99	46.30
THIRU AROOR. SU.	49.45	66.60	70.00	5.11	41.56
OUDH SUGAR MILLS	93.65	120.70	128.95	6.84	37.69
DHAMPUR SUGAR	116.15	156.85	159.75	1.85	37.54
KESAR ENTERPRISE	36.10	48.85	49.00	0.31	35.73
DWARIKESH SUGAR	277.85	362.65	375.60	3.57	35.18
UPPER GANG. SUG.	264.75	340.30	357.30	5.00	34.96
RAJSHREE SUGARS	50.85	64.80	67.40	4.01	32.55
PICCADILY SUGAR	9.19	11.57	12.15	5.01	32.21
SIMBHAOLI SUGAR	26.55	33.50	34.55	3.13	30.13
DHARANI SUGARS	29.60	37.35	38.50	3.08	30.07
DALMIA BHARAT	121.75	150.85	156.50	3.75	28.54
INDIAN SUCROSE	30.30	36.35	38.15	4.95	25.91
KM SUGAR MILLS	24.85	30.65	31.00	1.14	24.75
SAKTHI SUGARS	31.65	38.95	39.35	1.03	24.33
TRIVEN.ENGG.IND.	56.00	66.15	67.90	2.65	21.25
MAWANA SUGARS	44.50	51.25	53.75	4.88	20.79
KCP SUGAR &INDS.	27.15	32.00	32.75	2.34	20.63
PONNI SUG.ERODE	189.65	221.45	228.50	3.18	20.49
PICCADILY AGRO	8.50	9.73	9.99	2.67	17.53
SH.RENUKA SUGAR	12.96	14.91	15.18	1.81	17.13
EID PARRY	243.30	280.90	282.35	0.52	16.05
DHAMPUR.SPL.SUG.	17.90	19.45	20.75	6.68	15.92
BALRAMPUR CHINI	118.00	134.40	136.30	1.41	15.51
BAJAJ HINDUSTHAN	13.12	14.79	14.90	0.74	13.57
DCM SHRIRAM INDS	214.90	237.55	240.50	1.24	11.91
EMPEE SUGARS	6.70	7.20	7.40	2.78	10.45