Sugar stocks surged by up to 5 percent following reports that the government is considering proposal to hike prices of ethanol in the 2024-25 season, while also pushing for diversification of feedstocks, as it aims to achieve the 20 percent blending target by 2025-26.
A committee led by a joint secretary from the petroleum ministry has already discussed the proposal. The adjustment in ethanol prices will align with the fair and remunerative price of sugarcane, reported PTI citing sources.
The price revision is being considered on priority to incentivise production and meet blending goals, the report added. This comes after Cooperation Minister Amit Shah, last week, called for a multi-dimensional approach to biofuel manufacturing and affirmed that India would achieve its 20 percent ethanol blending target by 2025-26, ahead of the original 2030 deadline.
Ethanol prices have remained unchanged since the 2022-23 season (November-October). Currently, the price of ethanol produced from sugarcane juice is fixed at Rs 65.61 per litre, while rates for ethanol from B-Heavy and C-Heavy molasses are fixed at Rs 60.73 and Rs 56.28 per litre, respectively. The sugar industry has been demanding ethanol price hikes for quite some time now.
The move is expected to boost the profitability of sugar companies, as higher ethanol prices could lead to increased revenues from the sale of ethanol, a key byproduct in sugar manufacturing. Investors responded positively to the news, driving up the stock prices of major sugar producers.
Following the media report, shares of Bajaj Hindustan Sugar, Balrampur Chini Mills, Dalmia Bharat, Awadh Sugar, Mawana Sugars, Shree Renuka Sugar, Triveni Engineering and Dhampur Sugar rose up to 6 percent.
Gains in Balrampur Chini Mills were also boosted by the company's Q1 results as it reported improvement in volumes and realisations in the sugar segment that supported its overall performance. With adequate sugar stocks in India, analysts expect a resumption of the ethanol-blending program as was the case until Sugar Season (SS) 23.
