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Home » Stock Market » 5 stocks of sugar sector with upside potential

10 Jul 5 stocks of sugar sector with upside potential

Posted at 11:59 AM in Stock Market by

 

Why many analysts are bullish on the sugar sector


 

The recent spike in global sugar prices has drawn attention to the sugar sector.

The international demand for sugar is strong during this sugar season, resulting in sugar mills reaching their quota of 6.1 million tonnes. This high demand has led to an increase in international sugar prices, with it being around Rs 53 per kg, compared to the ex-mill price in India, which ranges from Rs 34.5 to Rs 36 per kg.

But it is worth noting that the Indian sugar industry has been undergoing a transformation even before this price increase.

As early as 2001, there were attempts to mix ethanol with other fuels in order to reduce the country’s oil import bill and support the industry.

However, these initial attempts did not succeed and faced limitations.

Around six years ago, new attempts were made to promote the blending of ethanol with other fuels. Initially, there was skepticism within the industry and among investors about the sustainability of these efforts. However, the stability in policy support from the central government and better policies implemented by several state governments have contributed to the industry’s re-rating. To learn more about basics of Economic concepts and Stock market one can consider enrolling in our Stock Market Learning Courses, here.

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The blending of ethanol with fuels has had a positive impact on the financial performance of many sugar companies. This is evident from the expansion and restructuring activities undertaken by these companies.

The macro changes brought about by the ethanol blending policy are now recognized as long-term and sustainable, leading to increased bullishness among analysts and greater participation from domestic institutional investors in the sugar sector.

This could be the probable reason why some analysts are getting bullish and institutional investors are also getting active in the sugar sector.

Sugar mills are expanding existing capacity or adding new facilities for ethanol production. The installed capacity with sugar mills for ethanol production is currently 730 crore liters a year. Almost 85% of the ethanol supply comes from sugar mills.

The Niti Aayog estimates that more than 1,000 crore liters of ethanol will be required for a 20% blend.

 
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There could be many opportunities in this sector, here is the list of 5 stocks suggested by experts that can give potential returns

E I D-Parry:

 

  • Established in 1788.
  • Part of the Murugappa Group conglomerate
  • Presence in the farm inputs business through subsidiary Coromandel International Limited.
  • Segments: Nutrient and Allied Business, Crop Protection, Sugar, Co-Generation, Distillery, Nutraceuticals, and Others.

    •  
    Sugar Business Overview:

  • Operates approximately nine sugar plants located across South India.
  • Offers refined sugar, white sugar, and specialty sugars.
  • Offers customized grades of pharmaceutical sugar for various pharma applications.
  • Provides sugar to specialty and industries such as infant food, beverages, and confectionery

    •  
    Nutraceuticals Business Overview:

  • Diversified into the nutraceuticals sector.
  • Produces and markets nutritional and functional food ingredients.
  • The product range includes Organic Spirulina, Organic Chlorella, Organic Phycocyanin, and others.
  • Also offers hand sanitizers and medical-grade hand sanitizers.

    •  
    Key Strengths:

  • Commitment to quality, innovation, and sustainability.
  • A long-standing presence in the industry.
  • Wide range of sugar products to meet diverse market needs.
  • Diversification into the growing nutraceuticals sector.
  • Association with the reputed Murugappa Group.

    •  


     

    Also Read:Biggest Positive Development in Tata Power
     

    Triveni Engineering Industries Ltd:

     

      • Established over 85 years ago.
      • Integrated sugar manufacturing company.
      • Diversified businesses categorized into two segments:
      • Sugar & Allied Businesses and Engineering Business.

        •  

    Sugar Business Overview:

    • Operates sugar mills in Uttar Pradesh.
    • Manufacturing a variety of sugar grades.
    • Produces refined sugar, specialty sugars, and by-products like molasses and bagasse.
    • Two distilleries with a total capacity of over 320 kiloliters per day are located in Muzaffarnagar and Sabitgarh, Uttar Pradesh.
    • Seven manufacturing plants are located in Uttar Pradesh.

     
    Co-Generation of Power:

    • Generates power through integrated sugar complexes.
    • Utilizes bagasse, a by-product of sugar manufacturing.
    • Supplies power to the state electricity grid.
    • Strong presence in the renewable energy sector.

      •  

    Engineering and Water Management:

    • Manufactures and supplies steam turbines, gears, and engineering products.
    • Diversification into the engineering business.
    • Water management initiatives.

      •  

    Key Strengths:

    • Long-standing history in the sugar industry.
    • Emphasis on efficient sugar production and utilization of by-products.
    • Presence in the renewable energy sector through co-generation plants.
    • Expansion into engineering and water management businesses.
    • Strong foothold in Uttar Pradesh, a major sugarcane-producing state.

      •  

      Dwarikesh Sugar:

       

    • Established in 1993.
    • Headquartered in Uttar Pradesh, India.
    • Engaged in the production of sugar and related products.

      •  

      Business Overview:

      • Manufactures sugar and allied products.
      • Involved in the production of power and ethanol/industrial alcohol.
      • Segments: Sugar, Co-Generation, and Distillery.

        •  
        Sugar Business Overview:

      • Combined production capacity of approximately 21,500 tons of sugarcane per day.
      • Offers a range of sugar grades, including refined sugar and specialty sugars.
        Manufacturing Units:

        • Two sugar plants are located in Bijnor district, Uttar Pradesh (Dwarikesh Nagar and Dwarikesh Puram).
        • Additional manufacturing unit at Dwarikesh Dham in Tehsil Faridpur, Bareilly.

        • Co-Generation of Power:

          • Generates power through bagasse and other biomass sources.
          • Supplies surplus power to the state electricity grid.
          • Contributes to the renewable energy sector.
          • Approximately 90 megawatts of power plants at manufacturing units use bagasse to generate power

         
        Distillery:

          • Approximately 30 kiloliters per day (KLPD) distillery uses molasses to manufacture industrial alcohol.
          • Produces rectified spirit and ethanol.

         
        Key Strengths:

        • Focus on efficient sugarcane crushing and sugar production.
        • Diversification into ethanol production.
        • Contribution to the renewable energy sector through power generation.
        • Strong presence in Uttar Pradesh, a major sugarcane-producing region.
        • Commitment to quality and customer satisfaction.  
           
     
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    Dhampur Sugar:

     

  • Established in 1933.
  • Based in Uttar Pradesh, India.
  • Involved in sugar manufacturing, distillery, and power generation.
     
    Sugar Business Overview:
     

  • Operates sugar mills in Uttar Pradesh.
  • Emphasis on advanced technology for sugarcane crushing and sugar production.
  • Offers various sugar grades, including refined sugar and specialty sugars.
  • Focus on product quality and market diversification.
     
    Distillery Operations:
     

  • Diversification into the production of industrial-grade alcohol and ethanol.
  • Utilizes molasses and other feedstocks for alcohol production.
  • Participates in the ethanol blending program.
     
    Power Generation:

  • Generates power through bagasse and coal.
  • Supplies surplus power to the state electricity grid.
  • Contributes to the renewable energy sector.
     
    Key Strengths:
     

  • Extensive experience in sugar manufacturing.
  • Technologically advanced sugarcane crushing and sugar production processes.
  • Diversification into distillery operations and ethanol production.
  • Contribution to the renewable energy sector through power generation.
  • Strong presence in Uttar Pradesh, a major sugarcane-producing state.

     

    Praj Industries Ltd:

     

  • Established in 1985.
  • Headquartered in Pune, India.
  • Engaged in the design, manufacturing, and implementation of bioenergy and high-purity water solutions.
     
    Bioenergy Solutions:
     

  • Specializes in the production of biofuels, including ethanol and biodiesel.
  • Offers technology solutions for bioethanol production from various feedstocks, such as sugarcane, corn, and lignocellulosic biomass.
  • Provides advanced engineering systems for biofuel production, including process plants and equipment.
  • Focuses on developing sustainable and environmentally friendly bioenergy solutions.
     
    Water Solutions:
     

  • Provides water and wastewater treatment solutions for industrial and municipal sectors.
  • Offers technologies for water purification, resource recovery, and zero-liquid discharge systems.
  • Specializes in high-purity water solutions for various industries, including pharmaceuticals, food and beverages, and power plants.
  • Focuses on innovative and energy-efficient water treatment technologies.
     
    Research and Development:

  • Invests in research and development activities to enhance bioenergy and water treatment technologies.
  • Collaborates with academic institutions and research organizations to drive innovation.
  • Focuses on developing sustainable and cost-effective solutions to address global challenges.
     
    Global Presence:
     

  • Operates in over 75 countries worldwide.
  • Has a strong presence in India, North America, South America, Europe, and Asia.
  • Provides turnkey solutions and engineering services to clients across diverse industries.
     
    Key Strengths:
     

  • Technological expertise in bioenergy and water treatment solutions.
  • Focus on sustainable and environmentally friendly practices.
  • Commitment to research and development for continuous innovation.
  • Strong global presence and client base.
  • Contribution to the bioenergy sector and clean water initiatives.

    •  

    Praj Industries Ltd is a leading player in the bioenergy and water treatment sectors, offering advanced solutions to meet the increasing demand for renewable energy and sustainable water management. With a focus on technology, innovation, and global reach, the company plays a crucial role in driving the transition towards a greener and more sustainable future.
     

    Please note that we are not SEBI-registered advisors or analysts. All the views shared in this article and all the content shared on aceink.com are only for learning and educational purposes. Any part of the article or any information on Aceink.com should not be interpreted or considered as investment advice. None of the opinions, views, or content posted on Aceink.com constitutes investment advice, as we are not SEBI-registered advisors or analysts.

    DISCLAIMER:

    We are not SEBI-registered advisors or analysts. All the views shared in this article and all the content shared on aceink.com are only for learning and educational purposes. Any part of the article or any information on Aceink.com should not be interpreted or considered as investment advice. None of the opinions, views, or content posted on Aceink.com constitutes investment advice, as we are not SEBI-registered advisors or analysts.

    Aceink.com or any person associated with this website accepts no liability or responsibility for any direct, indirect, implied, or any other consequential damages arising directly or indirectly due to any action taken based on the information provided on this website. Please conduct your own research, and we suggest seeking investment advice only from a SEBI-registered investment advisor.

    The views expressed by investment experts, broking houses, news and media houses, rating agencies, etc., are their own and not those of Aceink.com or its management. Aceink.com advises users to consult a SEBI-registered investment advisor before making any decisions.
     

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