Sugar companies witness up to 20% surge intraday on loan disbursement timeline for ethanol projects, higher export expectations

Shares of sugar companies were buzzing on Wednesday with stocks rising by up to 20 per cent on the BSE in the intraday trade. The surge in the sugar stocks came as the Government extended the timeline for loan disbursement for ethanol projects and on higher expectations of India’s sugar exports data. 

Individually, shares of Magadh Sugar & Energy, Rana Sugar, Uttam Sugar Mills, and KM Sugar gained between 16-20 per cent, while Andhra Sugar stock, which hit a new 52-week high, jumped over 12 per cent on the BSE intraday.  

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Similarly, shares of Mawana Sugar, Shree Renuka Sugar, Triveni Engineering, Dhampur Sugar Mills, and Dwarikesh Sugar each rallied between 5-10 per cent on the BSE intraday.  

Dhampur Sugar Mills and Dwarikesh Sugar stocks touched their respective new 52-week high today on the BSE. 

The government on Tuesday extended the timeline for disbursement of loans for ethanol projects under different schemes till September 30 this year, as part of its efforts to boost domestic production and achieve ethanol blending of 20 per cent by 2025, according to a PTI report. 

In an official statement, the government said it has decided to extend the timeline for disbursement of loans till September 30, 2022, in respect of all the schemes notified during 2018-2021. 

Meanwhile, the Indian Sugar Mills Association (ISMA) on April 4, 2022, had said that India's sugar export may touch 85 lakh tonne in the ongoing 2021-22 marketing year ending September, as per the estimates of global trade houses, another report of PTI stated. 

While the country has contracted 72 lakh tonne of sugar export, the physical exports have been around 56-57 lakh tonne till March-end this year, the association had further said. 

Brokerage firm Philip Capital in its report pointed out that the sugar companies generate additional income by selling surplus power, mainly to state electricity boards, and most states have started lowering power purchase prices, which has reduced income from co-generation. 

Sugar mills can extract better value from bagasse with separation of “cellulose, hemi-cellulose and lignin” and manufacture value-added chemicals including 2G ethanol, it added. 

Similarly, press mud – another by-product, can create huge value addition by producing bio-CNG and bio-fertilizers for sugar firms and some mills are also working on the recovery of potash by concentration and incineration of molasses spent wash, the brokerage also said.