Moneycontrol
Last Updated : Sep 14, 2018 01:41 PM IST | Source: Moneycontrol.com

Sugar stocks extend gains, zoom 20% after government hikes ethanol price by 25%

Among the sugar stocks, standout names include Mawana Sugars which zoomed 20 percent followed by Rana Sugars (up 20 percent) which breached upper circuit of Rs 4.20 and saw spurt in volume by more than 15.90 times.

Sandip Das @Im_Sandip1
 
 
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Sugar stocks are rallying this Friday afternoon and have given robust gains after the government approved hiking the price of ethanol produced directly from sugarcane juice for blending in petrol by 25 percent.

The Cabinet Committee on Economic Affairs on Wednesday raised the procurement price of ethanol derived from 100 percent sugarcane juice to Rs 59.13 per litre from the current rate of Rs 47.13. The move would help sugar mills quickly release arrears of cane farmers, which stands at over Rs 13,000 crore, PTI reported.

With this price hike government also aims to increase the investments for the capacity building as experts believe that there is hardly any sugar mill in India that buys sugar cane only for the production of ethanol.

Among the sugar stocks, standout names include Mawana Sugars which zoomed 20 percent followed by Rana Sugars (up 20 percent) which breached upper circuit of Rs 4.20 and saw spurt in volume by more than 15.90 times.

Avadh Sugar, Dalmia Bharat Sugar, Uttam Sugar, Dhampur Sugar and Sakthi Sugars are all trading higher by 20 percent in the afternoon trade.

Ugar Sugar, Dwarikesh Sugar, Bajaj Hindusthan, Triveni Engineering, Shree Renuka Sugars and KCP Sugar Mills are also rally with gains ranging between 18-20 percent.

Speaking to CNBC-TV18, Vivek Saraogi, Managing Director of Balrampur Chini Mills said, "I am looking positively on ethanol, positively at power and with an export programme, I am not seeing sugar prices go down. If they don't move up substantially, which I don't think they will, they would play in this Rs 31-32 range. So with good capacity, good recovery, Extreme integration and just hoping for some more realisation from the state government."

"We welcome the hike in ethanol prices, especially B-heavy molasses segment and will see heavy bidding for both C & B heavy molasses with price increase and expects blending at 10 percent by next year."

"Balrampur Chini has ethanol capacity of 11.88 crore litres that can increase to 18 crore litres by next year. The company is happy with steps the Central government is taking for the sugar sector and expects revenue at Rs 800 crore post capacity expansion from ethanol."

"We do not see sugar prices going down while increase in ethanol price will definitely deal with sugar surplus," he added.
First Published on Sep 14, 2018 01:41 pm
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