Buy sugar stocks: Rajen Shah

Rajen Shah, Angel Broking is of the view that one can buy sugar stocks.

Shah told CNBC-TV18, "We are buyers in sugar sector. It is really very positive move from the government especially  in lieu of the fact that this has been done despite a very high subsidy bill. In fact, this measure is going to add another  Rs 5,000 crore to its subsidy bill. So despite that, the government has gone ahead. So we expect lot of probably  strong measures like this happening, strong reforms like this happening over the next 12 months before elections."
He further added, "Coming to the sugar sector, I think total burden will be about Rs 5,000 crore on the government. So  less 33 percent will be the extra PAT for the sugar industry. So we are expecting the sugar industry to be richer by  about Rs 3,000-3,500 crore. We were working on our two favourites EID Parry and Bannariamman Sugars. In EID Parry, we are expecting the EPS to go up by about Rs 4. This year, it should quote about Rs 18-20 kind of earnings  and the stock is around Rs 150. That is very cheap."
"We worked out on Bannariamman Sugars, the EPS could go up by as high as Rs 40 per share. So that could be  about Rs 150 kind of earnings for the current year, stock is at about Rs 900. We do expect the sugar rally to continue  and these two stocks would be doing very well."