Sugar stocks rise up to 8% intraday as focus on ethanol blended fuel grows amid surging oil prices

Crude oil is on the boil as prices hit USD 115 for Brent on Thursday amid the ongoing Ukraine-Russia tension. But not everybody is complaining. The domestic sugar companies are set to gain from this rally in oil as the focus turns on blending fuel with ethanol.  

On Thursday, sugar stocks were trading with strong momentum and gained up to 8 per cent on the BSE in the intraday trade.   

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Dhampur Sugar Mills' shares gained most, rising by 7.5 per cent. It was followed by Balrampur Chini Mills which was up over 7 per cent. Dalmia Bharat Sugar and Industries up over 6.5 per cent, while Triveni Engineering and Shree Renuka Sugars each rallied around 6 per cent. 

Similarly, Dwarikesh Sugar Industries and EID Parry (India) soared between 5-2 per cent among other sugar stocks on the BSE intraday. In comparison, the S&P BSE Sensex was down 0.25 per cent at 55,337 points at around 1:00 PM. 

Oil prices skyrocketed on Wednesday, hitting multi-year highs, even as OPEC+ nations agreed to stick to their plans for a modest output rise in April, ignoring the Ukraine crisis. The Brent crude touched an intraday high of $121.89 a barrel, the highest since April 13, 2012. 

According to brokerages, the sugar industry is on the cusp of a mega transformation and emerged as a potent driver of clean energy, driving India's shift to renewable energy faster. The government has not only advanced the ethanol blending program but also has raised it to 20 per cent.  

By 2030, ethanol demand is expected to rise to 15.7 billion litres, of which 11.7 billion litres will be required for blending at 20 per cent and the remaining 4 billion litres for non-fuel purposes, most of the brokerages expect. 

Niraml Bang noted that the sugar production and prices are expected to remain firm, supported by global prices and demand for ethanol blending.  

In this regard, another brokerage house JM Financials picks Balarampur Chini and EID Parry as best bet for a return of 9 and 21 per cent and sets a target price of Rs 410 and Rs 490 per share respectively.