On Friday, September 27, sugar stocks jumped significantly during trading after Indian Food Minister Pralhad Joshi hinted at possible increases in ethanol prices and a review of the minimum selling price (MSP) for sugar. He mentioned that a committee is discussing a plan to raise the MSP, which has been stuck at ₹31 per kg since February 2019.
Joshi expressed optimism about sugar production for the upcoming 2024-25 season, which starts in October. This news led to a surge in sugar stocks, with Shree Renuka Sugars leading the way with an 8% increase. Balrampur Chini Mills and Bajaj Hindusthan Sugar also saw gains of 6%, while Mawana Sugars rose by 5.6%, and KM Sugar Mills increased by 5%. Other sugar companies, like Avadh Sugar & Energy and Dalmia Bharat Sugar, also reported gains of 4% to 5%.
The sugar industry has been advocating for a much-needed increase in the MSP and ethanol prices. The current ethanol prices have not changed since the 2022-23 supply year. Right now, ethanol made from cane juice costs ₹65.61 per litre, while ethanol from B-Heavy and C-Heavy molasses is priced at ₹60.73 and ₹56.28 per litre, respectively. The government sees the ethanol blending program as vital for achieving its green energy goals and helping sugar mills financially.
Recently, the Department of Food and Public Distribution allowed sugar mills to produce Rectified Spirit (RS) and Extra Neutral Alcohol (ENA) from sugarcane juice and B-heavy molasses. In late August, the government also lifted previous restrictions on using sugarcane juice and syrup for ethanol production in the 2024-25 ethanol supply year, which is expected to increase ethanol sales and assist sugar companies with high inventory levels.
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