Sugar Stocks in India
Exploring the Growth Potential of Sugar Stocks in India. In this blog post, we will delve into the thriving sugar industry in India and discuss the potential investment opportunities in sugar stocks. We will explore the factors driving the growth of this sector, such as increasing domestic consumption, rising exports, and government policies. Additionally, we will analyze the performance of key sugar companies in India and provide insights into their financials and market position. Whether you are a seasoned investor or someone looking to diversify your portfolio, this blog post will provide valuable information on why sugar stocks in India could be a sweet addition to your investment strategy.
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Table of Contents
Sugar Stocks to Buy in India by Market Cap
| Sugar Stocks Name | P/E | Market Cap | ROCE % | Sales Rs.Cr. | Operating Profit Margin % |
| Sh.Renuka Sugar | 10768.05 | 9.41 | 9718.8 | 6.17 | |
| EID Parry | 9.15 | 9071.73 | 27.36 | 32860.14 | 9.84 |
| Balrampur Chini | 16.32 | 8819.47 | 10.42 | 5401.78 | 15.03 |
| Triven.Engg.Ind. | 18.28 | 7933.94 | 17.53 | 5652.06 | 11.4 |
| Bajaj Hindusthan | 4242.29 | 0.91 | 5978.13 | 4.68 | |
| Dalmia Bharat | 11.85 | 3642.35 | 12.17 | 3314.77 | 15.21 |
| Bannari Amm.Sug. | 21.16 | 3238.9 | 11.93 | 2619.79 | 12.85 |
| Dhampur Sugar | 11.12 | 1750.64 | 15.22 | 2457.92 | 12.49 |
| Dwarikesh Sugar | 15.86 | 1715.25 | 15.46 | 1933.1 | 11.31 |
| Uttam Sug.Mills | 11.82 | 1686.94 | 19.11 | 2063.11 | 13.2 |
Understanding Sugar Stocks in India
The global sugar market seems bullish with the down in global sugar stocks and an expected global sugar price hike in 2023-24. According to the International Sugar Organization (ISO), global sugar production is expected to decrease by -1.2% in the upcoming 2023-24 sugar season as against the previous year’s production of ~177 MMT to reach ~174.8 MMT.
The global sugar consumption is expected to rise in the 2023-24 season to reach 176.95 MMT, which is up by 0.24% from the previous season. That results in a deficit of -2.2 MMT in the 2023-24 period.
This is a clear shift in the global sugar market from surplus to deficit and hence sugar price is expected to rise further. Global sugar prices have seen an increase of 49% over the last 12 months to June 2023. With lower sugar production the price may further rise in 2023-24.
Global sugar consumption is projected to reach over 220 MMT by 2030 mainly spurred by income growth in low and middle-income countries in Asia and Africa.
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Sugar Stocks and Sugar Market of India
India is the world’s second-largest sugar producer after Brazil. The Indian Sugar Mills Association (ISMA) projected a 3.4% year-on-year decline in India’s sugar production for 2023-24, with an estimated production of 31.68 MMT.
According to the Indian Sugar Mills Association (ISMA), sugar production in India is estimated at 33.7 million tons for 2023-24 which is 8% less than the 36.6 tons estimated for 2022-23.
Again, a substantial supply of sugarcane and derivatives is diverting to the ethanol industry which could lead to a lower domestic supply of sugar in 2023-24 that doesn’t meet domestic consumption.
Sugar mills diverted 4.1 million tons of sugar for ethanol production in the 2022-23. If the same amount of sugar will be allocated in 2023-24 the new season’s output could be down to 29.6 million tons.
Sugar Stocks and Sugar Consumption in India
India’s average domestic sugar consumption stands at approximately 29.5 MMT in the year 2022-23. However, the domestic consumption in India is estimated to lower at 27.5 MMT in 2023-24. This leaves a surplus of 4.2 MMT sugar at the end of the season.
Sugar Stocks export restriction
The sugar industry in India is one of the most important agricultural sectors, contributing around 2% to the country’s GDP and employing over 5 crore people directly and indirectly. India is the world’s second-largest producer of sugar accounting for around 10% of global sugar production.
India’s sugar exports were 7.4 MMT for 2022-23 owing to continued favorable market prices. Considering the domestic demand and lower sugar production in India, the Indian government may continue restricting sugar exports for the year 2023-24 to maintain domestic sugar market prices.
Sugar mills are asking for a free hand in the export of sugar. However, looking at the election year, the restriction on sugar exports may continue. If government restrictions on sugar export remain as it was, this will not be helpful to the sugar companies.
Investment Opportunities in Sugar Stocks
The Indian sugar industry is expected to witness strong growth in the coming years, driven by factors such as increasing domestic demand, rising ethanol production, and favorable government policies towards ethanol consumption. This growth is expected to benefit sugar companies, which are likely to see higher revenue and profits.
The government of India would increase ethanol blending in vehicle fuel from 10% in ESY 2021-22, to 12% blending in ESY 2022-23. The blending of ethanol may increase to 15% in ESY 2023-24. This will again drive the top and bottom lines of these sugar companies.
As a result, sugar stocks may offer attractive investment opportunities for investors. However, it is important to note that the sugar industry is cyclical and sugar prices can be volatile. Investors should carefully consider the risks involved before investing in sugar stocks.
Best Sugar Stocks to Invest in India
Here are some of the best sugar stocks to invest in India in 2023:
- Balrampur Chini Mills: Balrampur Chini Mills is one of the largest sugar producers in India. The company has a strong track record of profitability and is well-positioned to benefit from the growth of the Indian sugar industry.
- Dhampur Sugar Mills: Dhampur Sugar Mills is a sugar and ethanol producer with a strong focus on research and development. The company is well-positioned to benefit from the government’s push for ethanol production.
- Triveni Engg.Ind.: One of the largest integrated sugar manufacturers in India and a market leader in our engineering businesses. The company also produces potable alcohol and fuel-grade Ethanol.
- Dwarikesh Sugar: One of the well-respected sugar companies in north India. The company produces sugar, ethanol, sanitizer, etc. The company is aggressively adding up capacity in the distillery business and is in well position to take the benefit of ethanol push by the government of India. The company will double its ethanol volume from 5.6 crore liters in FY22 to 11 crores in FY23.
- Mawana Sugars: Mawana Sugars is a sugar and ethanol producer with a strong presence in the northern Indian market. The company is well-positioned to benefit from the growing demand for sugar and ethanol in the region.
Listed Sugar Stocks in India
Sugar Stocks in India
| Sugar Stocks Name | Mar Cap Rs.Cr. | ROCE % |
|---|---|---|
| Sh.Renuka Sugar | 10768.05 | 9.41 |
| EID Parry | 9071.73 | 27.36 |
| Balrampur Chini | 8819.47 | 10.42 |
| Triven.Engg.Ind. | 7933.94 | 17.53 |
| Bajaj Hindusthan | 4242.29 | 0.91 |
| Dalmia Bharat | 3642.35 | 12.17 |
| Bannari Amm.Sug. | 3238.9 | 11.93 |
| Dhampur Sugar | 1750.64 | 15.22 |
| Dwarikesh Sugar | 1715.25 | 15.46 |
| Uttam Sug.Mills | 1686.94 | 19.11 |
| Avadh Sugar | 1407.38 | 10.41 |
| DCM Shriram Inds | 1083.08 | 10.05 |
| Dhampur Bio | 1064.52 | 10 |
| Ugar Sugar Works | 1037.27 | 27.32 |
| Magadh Sugar | 1007.58 | 8.76 |
| Davangere Sugar | 901.55 | 8.41 |
| Kothari Sugars | 446.37 | 17.63 |
| Zuari Industries | 444.2 | 10.66 |
| KCP Sugar &Inds. | 435.05 | 4.98 |
| Rana Sugars | 406.51 | 12.56 |
| Mawana Sugars | 386 | 5.58 |
| Ponni Sug.Erode | 377.74 | 11.68 |
| Sakthi Sugars | 374.24 | 10.81 |
| Vishwaraj Sugar | 328.09 | 8.4 |
| KM Sugar Mills | 303.12 | 8.84 |
| Parvati Sweetner | 207.31 | 3.82 |
| SBEC Sugar | 203.66 | 6.36 |
| Rajshree Sugars | 200.31 | 4.61 |
| Indian Sucrose | 151.18 | 18.12 |
| Gayatri Sugars | 143.76 | 128.88 |
| Simbhaoli Sugar | 129.17 | -0.48 |
| Dollex Agrotech | 109.85 | 12.66 |
| Kesar Enterprise | 92.95 | -9.25 |
| Sir Shadi Lal | 75.08 | -4.89 |
| Dhampur.Spl.Sug. | 43.7 | 1.63 |
| Shree Hanuman Sg | 14.8 | -3.37 |
Bottom Lines
The Indian sugar industry is expected to witness strong growth in the coming years, driven by factors such as increasing domestic demand, rising ethanol production, and favorable government policies. This growth is expected to benefit sugar companies, which are likely to see higher sugar prices resulting in higher revenue and profits.
As a result, sugar stocks may offer attractive investment opportunities for investors. However, it is important to note that the sugar industry is cyclical and sugar prices can be volatile. Investors should carefully consider the risks involved before investing in sugar stocks.
Frequently Asked Questions (FAQs)
Q1: What are the key factors influencing sugar stock prices?
A: Sugar stock prices are influenced by factors such as demand-supply dynamics, global sugar prices, and government policies impacting the sugar industry.
Q2: How does government policy impact the sugar industry in India?
A: Government policies, including subsidies and regulations, and percentage of ethanol blending, significantly impact the sugar industry, affecting production, pricing, and market dynamics.
Q3: Is investing in sugar stocks a long-term or short-term strategy?
A: The suitability of investing in sugar stocks depends on individual goals and risk tolerance. Both long-term and short-term strategies can be viable based on market conditions.
Q4: What role does ethanol play in the growth of sugar stocks?
A: The growing demand for ethanol, especially as a biofuel, contributes to the growth of sugar stocks, as many sugar companies diversify into ethanol production.
Q5: How can investors mitigate risks when investing in the sugar sector?
A: Investors can mitigate risks by diversifying their portfolio, staying informed about industry trends, and conducting thorough research before making investment decisions.
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