Sugar stocks sweeten in weak market on hopes of higher export limit
Shares of sugar companies were in focus and rallied by up to 19 per cent on heavy volumes in an otherwise range-bound market in Friday’s intra-day trade on hopes of hike in sugar quota.
Rajshree Sugars & Chemicals hit a 52-week high of Rs 55, on rallying 19 per cent in intra-day trade. Ugar Sugar Works, Simbhaoli Sugars, Sakthi Sugars and Bajaj Hindustan were up in the range of 10 per cent to 15 per cent.
Dhampur Sugar Mills, Shree Renuka Sugars, EID Parry (India), Avadh Sugar & Energy, Dalmia Bharat Sugar and Industries, Balrampur Chini Mills and Dwarikesh Sugar Industries were up between 3 per cent and 5 per cent. In comparison, the S&P BSE Sensex was down 0.40 per cent at 61,552 at 10:15 AM.
According to a PTI report, the government may consider increasing sugar export quota for the current 2022-23 marketing year after assessing the domestic production in January.
In November, the government allowed export of 60 lakh tonnes of sugar for the 2022-23 marketing year (October-September). India exported a record 111 lakh tonnes of sugar in 2021-22 marketing year.
Meanwhile, according to Business Standard report, sugar production in the ongoing season (2022-23) may be only marginally lower than last year, and that should not cause any alarm, a section of the industry has said. It added that a clearer picture should emerge by early January as crushing picks up, the newspaper reported. CLICK HERE FOR FULL REPORT
Sugar production in the country is expected to be 36.5 MT after diverting 4.5 MT of equivalent sugar for ethanol. Considering sugar consumption of 27.5 MT, the country would be having a surplus of 9 MT, which is likely to be exported, according to analyst at ICICI Securities.
The brokerage firm believes the industry would be able to easily export 9 MT during the season. This would help keep the sugar inventory at 5.5-6.0 MT as on September 2023.
OMCs are looking to reach ethanol blending of 12 per cent in 2022-23 procurement year, which would result in ~550 crore litre of ethanol procurement. Most of these quantities would be supplies by the sugar industry. The government has increased ethanol prices between Rs 1.65 per litre to Rs 2.65 per litre for different feedstock. This would further encourage millers to set up distillery capacity in future, the brokerage firm said in result update.
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