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%.
 "Conditions for sugar mills to avail subsidy eased")
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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.
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 |