Ethanol price hike buzz triggers rally in sugar stocks; soar up to 9%

Sugar stocks, Ethanol price hike news: The price revision is being considered on priority to incentivise production and meet our blending goals, reports said

Sugar stocks rally, Ethanol price hike: Sugar stocks were ruling higher in a weak market on Tuesday, August 13, 2024. The rally in sugar shares came amid reports that the government may increase ethanol prices for the season starting November 2024.

"The price revision is being considered on priority to incentivise production and meet our blending goals," news agency PTI reported, citing sources.

A committee headed by a joint secretary from the petroleum ministry has already held one round of discussions on the proposal. The revision of ethanol prices will be based on the fair and remunerative price of sugarcane, the report added.

Among individual shares, Triveni Engineering and Industries soared 8.6 per cent to Rs 424 per share, Bajaj Hindusthan Sugar jumped 6.4 per cent (Rs 41.64), Balrampur Chini jumped 5.4 per cent (Rs 522.6), KCP Sugars and Industries 5.1 per cent (Rs 49.98), and Shree Renuka Sugars 4.5 per cent (Rs 48.2).

In fact, Balrampur Chini Mills hit an over two-year high today after the company delivered a stable performance for the June 2024 quarter (Q1FY25).

The company reported improvement in volumes and realisations in the sugar segment that supported its overall performance. With adequate sugar stocks in India, analysts expect resumption of the ethanol-blending program as was the case until Sugar Season (SS) 23.

In Q1FY25, Balrampur Chini reported 1.8 per cent year-on-year (Y-o-Y) increase in earnings before interest, tax, depreciation and amortisation (Ebitda) at Rs 166.13 crore as against Rs 163.18 crore in Q1FY24. Revenue from operations grew 2.3 per cent Y-o-Y at Rs 1,421.60 crore.

Despite facing challenges in distillery operations due to regulatory issues, sugar segment has continued to perform well in a seasonally soft quarter, benefiting from higher volumes and realisations. READ ABOUT IT HERE

Others, including Davangere Sugar, Dwarikesh Sugar, Rana Sugars, Vishwaraj Sugar, and Dhampur Sugar, were up in the range of 1 per cent to  3 per cent at 2:25 PM. By comparison, the BSE Sensex was down over 600 points (0.8 per cent) at 79,011 level.

Ethanol prices have stayed unchanged since the 2022-23 season (November-October). Currently, ethanol produced from cane juice is priced at Rs 65.61 per litre, while rates for ethanol from B-Heavy and C-Heavy molasses stood at Rs 60.73 and Rs 56.28 per litre, respectively.

The report said the committee is looking into the revision of prices of ethanol produced from sugarcane. This comes after the sugar industry demanded ethanol price hike, an increase in the minimum selling price of sugar, and permission for sugar exports.