Sugar stocks rally; Balrampur Chini, Triveni Engineering hit 52-week highs

Shree Renuka Sugars, Uttam Sugar Mills, Dalmia Bharat Sugar, Ugar Sugar Works, Dhampur Sugar Mills, Magadh Sugar & Energy, and Dwarikesh Sugar were up in the range of 6-12 per cent.

Shares of sugar companies rallied up to 12 per cent on the BSE in early morning deal on the back of heavy volumes on hopes that sweetener output may fall in 2019-20 due to low rains.

Triveni Engineering & Industries and Balrampur Chini Mills were up 7 per cent each, hitting their respective 52-week highs in intra-day trade today.

Shree Renuka Sugars, Uttam Sugar Mills, Thiru Arooran Sugars, Dalmia Bharat Sugar and Industries, Ugar Sugar Works, Dhampur Sugar Mills, Magadh Sugar & Energy and Dwarikesh Sugar Industries were up in the range of 6 per cent to 12 per cent on the BSE. In comparison, the S&P BSE Sensex was up 0.16 per cent at 39,112 levels at 10:26 am.

India's sugar production is likely to enter a correction mode in the next season starting October as a likely below-average monsoon rain may hit cane yield, Cogencies reported quoting National Federation of Cooperative Sugar Factories Managing Director Prakash Naiknavare.

Poor monsoon rains for the third consecutive year may not only hit cane sowing, but also affect cane yield and sugar recovery. Many industry experts expect production to even fall to 27-28 million tonne in the next season, the report said. CLICK HERE TO READ FULL REPORT

According to Indian Sugar Mills Association (ISMA’s) recent estimates, sugar production in SY19E is expected to fall by around 5.5 per cent YoY to 30.7 mn tn. ISMA’s earlier estimate was 31.5 million tonne of sugar production in SY19E. The downward revision in estimates was mainly due to reduction in yield per hectare.

According to Debashish Mazumdar, an analyst at Edelweiss Broking, Indian sugar sector has been known for its cyclical nature and volatility. However, recent initiatives undertaken by the Indian government is expected to address the problems of the sector. Minimum support price (MSP) has been declared, which will offer a floor to sugar prices in surplus scenario and keep profitability of the sector intact.

Incentives have been declared to encourage exports and help reduce oversupply, thereby supporting prices further. Further, the government has attempted to create right environment to encourage higher ethanol production and blending. Hence, we believe the dynamics of the sector are set to change in a structural manner, the brokerage firm said in sugar sector update.

Sugar prices in India are expected to rise going forward with production almost matching consumption in SY20E. Moreover, sugar prices have already shown some upward trend due to hike in MSP by the government, it added.

COMPANY	LATEST	PREV CLOSE	GAIN(%)
UTTAM SUG.MILLS	132.90	120.75	10.06
THIRU AROOR. SU.	14.60	13.55	7.75
DALMIA BHARAT	117.90	110.20	6.99
SIMBHAOLI SUGAR	11.50	10.75	6.98
MAWANA SUGARS	46.50	43.95	5.80
TRIVEN.ENGG.IND.	68.00	64.40	5.59
DHAMPUR SUGAR	226.70	214.90	5.49
SH.RENUKA SUGAR	11.30	10.72	5.41
MAGADH SUGAR	115.80	110.10	5.18
BALRAMPUR CHINI	147.35	140.30	5.02
DWARIKESH SUGAR	29.00	27.65	4.88
GAYATRI SUGARS	3.23	3.08	4.87
AVADH SUGAR	462.65	441.30	4.84
SAKTHI SUGARS	11.40	10.88	4.78
BAJAJ HINDUSTHAN	8.73	8.34	4.68
RAJSHREE SUGARS	24.05	23.00	4.57
KCP SUGAR &INDS.	16.80	16.15	4.02
UGAR SUGAR WORKS	14.65	14.15	3.53