Shree Renuka, Balrampur & others fall up to 6%; why are sugar stocks down?

Sugar stocks came under selling pressure on Monday as sentiment turned negative after oil marketing companies (OMCs) excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for the 2026-27 supply year for petrol blending.

On the bourses, shares of sugar-producing companies tumbled as much as 6 per cent, leaving investors concerned about the impact of the latest move on growth.

As of 11:30 AM, Shree Renuka Sugars shares were down 5.9 per cent to trade at ₹20.85. It was followed by Bajaj Hindustan Sugar and Dwarikesh Sugar Industries, both down more than 5.5 per cent at ₹20.09 and ₹43.90. 

Rana Sugars share skidded 5 per cent to ₹12.60, while Magadh Sugar & Energy and Mawana Sugars dropped 4.4 per cent to trade at ₹575.70 and ₹161.90, respectively. Uttam Sugar Mills shares were also down 4 per cent at ₹354.20. 

Other counters like Dhampur Bio Organics, Dalmia Bharat Sugar, Balrampur Chini Mills, The Ugar Sugar Works, Dhampur Sugar Mills, and Sakthi Sugars fell in the range of 3 to 4 per cent to trade at ₹135.20, ₹464.70, ₹699, ₹54.02, ₹190.85, and ₹17.92, respectively. Avadh Sugar & Energy shares slipped 2.5 per cent to trade at ₹970.65.

The move comes amid concerns over domestic sugar availability and rising prices after poor rainfall in key sugar-producing states, including Maharashtra and Karnataka, raised the risk of lower output.  READ MORE: OMCs bar sugar-based ethanol in 2026-27 tender, cuts maize incentive

Notably, sugar prices have surged around 35-40 per cent in recent months, prompting the government to ban sugar exports till September 30. Last week, the government released a quota of 1.4 million tonnes of sugar for domestic sales during the second half of October as ex-mill sugar prices have risen sharply in recent days. The allocation aims to ensure adequate supplies before Diwali and prevent further price hikes. India, the world's largest sugar consumer, has increasingly used ethanol blending to reduce its dependence on imported crude oil. The country has adopted petrol containing up to 20 per cent ethanol, known as E20, as the nationwide standard as part of efforts to reduce oil import dependence and emissions. 

"Extra sugar helps volumes, but with prices managed and the minimum selling price unrevised, upside may be capped. Still, the rulebook has changed four times since December 2023, usually once stocks recovered. The winners will be mills that no longer need cane-based routes to stay profitable," Hemant said.