Ethanol price hike due? Balrampur, Ugar, Renuka Sugars rally up to 18%

With a successive increase in cane price across India, but without any proportionate increase in ethanol price, sugar-based ethanol has seen a significant erosion in margins, say analysts.

Sugar stocks price movement today

 

Shares of sugar companies were in demand and rallied up to 18 per cent on the BSE in Wednesday’s intra-day trade on hopes of an increase in ethanol price, as crude oil prices flare up. Oil prices have surged up to 12 per cent since the start of the war in West Asia.

 

Ugar Sugar Works soared 16 per cent to ₹41.80 on the BSE in intra-day deals. Sakthi Sugars surged 13 per cent to ₹17.60, while Rajshree Sugars & Chemicals (₹29.80) and K M Sugar Mills (₹27.40) spurted 12 per cent each, followed by Bajaj Hindusthan Sugar (₹17.47), and Shree Renuka Sugars (₹25.94) rallied 10 per cent each, Balrampur Chini Mills (9 per cent to ₹500.20) and Triveni Engineering & Industries (5 per cent at ₹416.75). In comparison, the BSE Sensex was down 1.85 per cent at 78,753.21 at 10:57 AM.

 

 

What’s driving sugar stocks today?

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Indian equity markets declined as the prospect of prolonged turmoil in the West Asia and the ripple effects of higher oil prices prompted traders to shift funds into safe haven assets. India imports nearly 85 per cent of its crude oil requirements, and the sharp surge in crude prices to their highest level in four years has reignited investor concerns over inflation and the country’s external balances, further adding to the market’s losses, according to ICRA.

 

Meanwhile, the government has mandated the sale of petrol with up to 20 per cent ethanol and a minimum Research Octane Number (RON) of 95 across all States and Union Territories from April 1, 2026. This move makes E20 fuel the standard grade available to motorists nationwide.

 

E20 is petrol mixed with 20 per cent ethanol. Ethanol is an alcohol made mainly from sugarcane and grains such as maize and rice. It is produced domestically and burns cleaner than pure petrol.

 

Meanwhile, concerns regarding potential ethanol imports from the US and maize-based supplies have eased following the recent trade agreement. However, uncertainty persists around a long-term revision of domestic ethanol prices, Balrampur Chini Mills said in the Q3 earnings conference call.

 

Despite a 16.4 per cent increase in the Fair and Remunerative Price (FRP) and rising operating costs, ethanol prices under the B-heavy and juice routes have not been revised for the past three years. This is extremely disappointing and surprising, particularly since the requested revision would have had only a marginal—indeed sub-marginal—impact on oil marketing companies (OMCs), the company said.

 

Elara Capital view on Sugar sector

 

With a successive increase in cane price across India, without any proportionate increase in ethanol price, sugar-based ethanol has seen significant erosion in margins leading to lower percentage contribution in total blending mix. With a reduction in maize prices, grain ethanol margin may get further leg up, Elara Capital said in the January report.

 

The sugar ethanol sector is once again losing luster. Without policy interventions, the industry may be staring at another crisis. Analysts at Elara Capital expect rising cane cost to weigh on the margins of UP-based mills. The brokerage firm retains a positive stance on Balrampur Chini Mills, with an investment horizon of more than a year due to anticipated gains given its entry into Polylactic acid manufacturing.  =============================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.