Triveni Engineering, Dhampur Sugar top gainers on Monday as sugar stocks up 18% intraday; know what is triggering movement

Shares of sugar companies have jumped up to 18 per cent on expectations of strong volume growth and optimistic outlook. Many sugar stocks hit their 52-week highs on the BSE on Monday. 

Union minister Nitin Gadkari on Saturday said top officials of automobile companies have promised him that they will start manufacturing vehicles of flex-fuel variants within six months. Flex-fuel, or flexible fuel, is an alternative fuel with a combination of gasoline and methanol or ethanol. 

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The road transport and highways minister said companies like TVS Motor and Bajaj Auto have already started producing flex-fuel engines for their two and three-wheelers. According to Gadkari, soon most vehicles in India will run on 100 per cent ethanol, a PTI report said.  

Triveni Engineering & Industries and Dhampur Sugar Mills surged most with gains of over 18 and 15 per cent respectively. In the process both stocks hit their 52-week highs on the BSE. Similarly, Avadh Sugar and Mawana Sugar were also up over 10 per cent on the intraday basis and hit 52-week highs.

Other stocks like Uttam Sugar and Dalmia Bharat Sugar gained 13 and 11.5 per cent respectively on strong business outlook. While Magadh Sugar & Energy, Andhra Sugars, Dwarikesh Sugar Industries and Balrampur Chini Mills rallied in the range of 5-10 per cent.  

According to S Ranganathan, Head of Research at LKP Securities, “Sugar stocks gained post-election results and ethanol push while Paper stocks were in demand post price hikes that are seen to offset input cost pressures.” 

“Tailwinds from global sugar demand supply balance driving exports and higher sucrose diversion towards ethanol would allow the industry to curtail its closing inventory levels, which in turn would result in lower total debt, despite ongoing debt-funded distillery expansions,” according to ICRA. 

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