Many Sugar stocks hit upper circuit limits
Published On: Friday, July 9, 2021 | By: Team KnowMyStock
Sugar stocks created some flutter in today's(9th July 2021) session, with many stocks hitting upper circuit limits. Industry watchers said they anticipate a spike in sugar prices to Rs 36-37 per kg in the coming months. The sugar stocks have run up 2-4 times in four months, it is reported. "The sector has seen a turnaround from being cyclical to a structural growth story backed by the government's aggressive ethanol blending programme," it said. "With aggressive distillery capacity addition in India, sugar companies under our coverage should see strong earnings growth over the next three years." Dwarikesh Sugar Industries and Dalmia Bharat Sugar Industries surged 5 percent each to Rs 78.40 and Rs 475, respectively yesterday. Magadh Sugar and Energy jumped 4 percent to Rs 340, whereas EID Parry India gained 2 percent to Rs 417.70.
Global sugar prices have moved up 50 per cent in the last one year after two consecutive years of lower sugar output in Thailand. Moreover, despite the ongoing Brazilian crushing season, sugar prices have been firm. "With a massive increase in distillery capacities by sugar firms, ethanol sales are likely to double for most of our coverage companies. Ethanol sales would contribute 25-30% to revenues of major sugar companies by FY24," experts said.
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