OMCs announce additional incentive on maize-based ethanol; BCL Industries, Gulshan Polyols and sugar stocks jump

Stock market today: BCL Industries, Gulshan Polyols, and most sugar stocks edged higher in the morning trade on Friday, January 5, after oil marketing companies (OMCs) on Thursday announced an additional incentive of Rs 5.79 per litre (excluding goods and services tax) for ethanol sourced from maize.

At around 9:55 a.m., BCL Industries shares were up nearly 10 per cent, Gulshan Polyols stock was up over 4 per cent, Rajshree Sugars was up over 2 per cent, and Shree Renuka Sugars, Bajaj Hindusthan Sugar, and Mawana Sugars were trading over 1 per cent higher.

On Thursday, Indian state fuel retailers raised the purchase price of ethanol made from maize by Rs 5.79 per litre to Rs 71.86 ($0.8635) per litre to encourage its production for blending with gasoline. The new rates are applicable from today. 

To ensure a sufficient supply of the sweetener in the market, maize will be used as an alternative to sugar to boost ethanol production. In December, the government directed sugar mills not to use cane juice to produce ethanol as the country's sugar production is expected to decline in the 2023–24 marketing year that began in October. 

However, it lifted the ban within a week.

Also read: OMCs announce additional incentive of Rs 5.79 per litre on maize-based ethanol, hike applicable from Friday.

Earlier on Wednesday, Petroleum Minister Hardeep Singh Puri stated that the number of ethanol-blended fuel E20 stations in India has crossed 9,300 and that the government was on pace to complete the project by 2025.

Which companies will benefit from the move, and how?

According to Zee Business Research, BLC Industries, India Glycols, and Gulshan Polyols will benefit from the move as they manufacture ethanol from maize.

The price hike will help the above companies' earnings before interest tax depreciation and amortisation (EBITDA), realisation, and margins improve.

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