Sugar stocks on a roll over approval to 46 ethanol projects, but Dhampur sugar hits lower circuit—here is why?

Sugar stocks such as Dalmia Bharat, Balrampur Chini Mills, Triveni Engineering, Dwarikesh sugar, Mawana Sugars and others rose on Friday after the government gave in-principal approval to 46 ethanol projects. Reacting to the development, all of these sugar stocks surged between four to Seven per cent on Friday. Many sugar stocks such as Ugar Sugar Works, Mawana Sugars also hit upper circuits amid spurt in volume.  

However, in contrast to the trend, Dhampur sugar corrected 5% in a positive market on Friday. Around 2pm on Friday, the sugar counter was locked in a 5% lower circuit to Rs 317.30 per share on the BSE.  

The decline in prices of Dhampur sugar comes on the back of demerger news. Explaining the fall, Zee Business analyst Arman Nahar said Dhampur sugar has been demerged into two entities—Dhampur Sugar and Dhampur Bio Organics. Meaning, if you hold one stock of Dhampur sugar, now you will get one share each of the two companies.  

धामपुर शुगर में तेज गिरावट क्यों?

धामपुर शुगर दो कंपनियों में डीमर्ज होगी...

डीमर्जर के बाद कितनी क्षमता?

जानिए अरमान नाहर से...#DhampurSugar @ArmanNahar pic.twitter.com/t1WgEb2sX1

— Zee Business (@ZeeBusiness) May 13, 2022

Currently, Dhampur Sugar Mills has 5 units, out of which three will be transferred to the new unit as part of scheme of arrangement between the two demerged entities, said Nahar. Dhampur Bio Organics is expected to be listed on the exchnages within three months from now, he informed. 

Earlier, the Department of Food and Public Distribution gave in-principal approval to 46 ethanol projects under the new window of interest subvention schemes. 

These projects are expected to generate more than 260 crore liters of additional ethanol in the country, Zee Business has reported earlier. This approval has been given under the new window notified on April 22. Application for this project can be done through nsws.gov.in.