The ambitious goal of the Modi Government to transform the sugarcane belt in India as the energy belt, received a positive response from the stock market. Sugar companies like Shree Renuka Sugars , Balrampur Chini Mills, Bajaj Hindustan and Triveni Engineering surged after consolidating for a long time. Below we will list all sugar stocks that will benefit from ethanol production.
While the sugar ethanol sector has been an underperformer since 2022, the industry got the boost it needed on July 11th, when most of the Sugar stock surged by over 5%. Major ethanol producers such as Triveni Engineering saw intra day gains of over 9%.
The highly regulated Sugar sector depends heavily on the pricing set by the government. Their Supply is also subjected to the influence of the government. And if that’s not enough, mill owners lack the power to bargain over raw material as they are restricted to purchase sugarcane within a designated area.
Did You Know?
Sugar companies cannot own sugarcane fields in India.
What factors may boost Sugar Ethanol companies?
The sugar sector is highly cyclical in nature and follows a 3-5 year cycle. Prices are greatly affected by demand and supply of the raw materials. The diagram below represents the cycle in supply and demand of sugar which affects the stock prices.
Demand & Supply cycle of sugar
- When the production is more than the consumption, it results in sugar surplus.
- Surplus production results in lower price offering by the market. Profitability of sugar producing companies get a hit and their stock price declines.
- Companies lower their production amid low price and reduced profitability.
- Sugar supply in the market declines as producers diminish production.
- Shortage of supply leads to rise in sugar price.
- Rise in price motivates farmers to shift to sugarcane from other crops as the high sugar price may make them more returns.
- Since it’s easier to acquire raw material, sugar companies accelerate their production.
- And again, there is a surplus in the market.
What will change after rise in demand for ethanol?
This cycle may now experience a shift when the companies start to ramp up their ethanol production. This will bring shorter periods of excess sugar in the market as companies can turn their extra production to ethanol.
List of the top sugar companies in India by ethanol production capacity
| Company | Production Capacity (litres per day) |
|---|---|
| Shree Renuka Sugars Limited | 1,250,000 |
| Triveni Engineering & Industries Limited | 1,100,000 |
| Balrampur Chini Mills Limited | 1,050,000 |
| Bajaj Hindusthan Sugar Limited | 800,000 |
| Ugar Sugar Works | 800,000 |
| Dhampur Sugar Mills Limited | 350,000 |
| Dwarikesh Sugar Industries Limited | 338,000 |
| Avadh Sugar & Energy Limited | 325,000 |
| Uttam Sugar Mills Limited | 300,000 |
| Magadh Sugar & Energy Ltd | 150,000 |
| Mawana Sugars Limited | 120,000 |
| Riga Sugar Company Limited | 45,000 |
Top 5 sugar companies with highest ethanol production capacity
Below are companies with ethanol production capacity above 800 kilo liter per day, which are largest in India.
Shree Renuka Sugars Limited
Shree Renuka Sugars ltd is one of the largest sugar manufacturers in India, majoring in ethanol production. The company is ranked among the top few, with a capacity of 1,250,000 liters of ethanol daily. Renuka is well known to have an extensive geographical operating network with integrated manufacturing facilities exclusively dedicated to sustainability and innovation within biofuel manufacturing.
Triveni Engineering & Industries Limited
Triveni Engineering & Industries Ltd. is a diversified business house in the Indian sugar industry. It produces 1,100,000 liters of ethanol daily, representing an active commitment to the biofuel sector. With a focus on technological advancement and effective processes, Triveni takes a lead position in the ethanol market.
Balrampur Chini Mills Limited
BALRAMCHIN Limited is among the largest manufacturers of sugar in the country, thus playing a massive role in ethanol production. It plays a significant role, with a daily capacity of 1,050,000 liters. The company is known for its emphasis on efficiency, quality, and sustainability. It adds a significant amount to the country’s renewable energy program.
Bajaj Hindusthan Sugar Limited
Bajaj Hindusthan Sugar Limited is a big player in India, very massive in the scale of operation and the level of production. The company’s daily ethanol capacity equals 800,000 liters. Above all, integration and innovation are emphasized by BAJAJHIND, thus making it an integral component in ethanol and other renewable markets.
Ugar Sugar Works
UGARSUGAR is involved in the manufacturing of sugar and equally emphasizes the manufacturing of ethanol. The company currently has an ethanol production capacity of 800,000 liters per day. Hence, the company is committed to sufficient sustainable practices and efficient production in promoting biofuels to support the energy diversification goals set for India.
Sugar Ethanol Stocks by PE Ratio
Brelow is list of Ethanol stocks in India based on their Price-to-earning (PE) ration. Generally, companies with lower PE are considered to be undervalued. Some stocks below have 0 PE which means those companies are facing loses (negative earnings).
| Company Name | PE Ratio | Ethanol Production Capacity (KLPD) |
|---|---|---|
| Mawana Sugars Limited | 23.94 | 120 |
| Triveni Engineering & Industries Limited | 22.33 | 1100 |
| Dwarikesh Sugar Industries Limited | 17.28 | 338 |
| Balrampur Chini Mills Limited | 16.74 | 1050 |
| Dhampur Sugar Mills Limited | 11.61 | 350 |
| Avadh Sugar & Energy Limited | 10.48 | 325 |
| Uttam Sugar Mills Limited | 10.35 | 300 |
| Magadh Sugar & Energy Ltd | 9.64 | 150 |
| Bajaj Hindusthan Sugar Limited | 0.00 (Negative) | 800 |
| Shree Renuka Sugars Limited | 0.00 (Negative) | 1250 |
| Riga Sugar Company Limited | 0.00 (Negative) | 45 |
Top ethanol producing sugar companies by market share
| Company Name | Market Cap (Rs. Cr.) |
|---|---|
| EID Parry | 13,912.05 |
| Shree Renuka Sugars | 10,989.39 |
| Balrampur Chini | 8,945.56 |
| Triveni Engineering Industries | 8,823.78 |
| Bajaj Hindusthan | 5,451.77 |
| Bannari Amman Sugars | 3,793.13 |
| Dalmia Bharat Sugar | 3,506.75 |
| DCM Shriram Industries | 2,009.26 |
| Dhampur Sugar | 1,559.43 |
| Dwarikesh Sugar | 1,443.50 |
Final Words
Ethanol may prove to be more profitable for sugar companies aimd rise in its demand and its wide range of uses. This will bring sugar producers more profits which will appreciate their share prices.
Freaquently asked questions
Where is ethanol produced from sugar used?
Ethanol has wide range of uses like blending in fuel like petrol, biofuel and industrial uses such as solvents.
Which company has highest ethanol production capacity in India?
Shree Renuka Sugars has ethanol production capacity of about 1250 Kilo Liter per day which is highest in India.
How much ethanol is blended in petrol in India?
The Indian Govenment has already achieved its goal of 10% ethanol blended petrol, and now they want are heading towards E20 which is 20:80 blend. They aim to achieve target of 20% blend by 2025.
Very interesting points you have mentioned, thanks for posting.