Balrampur Chini Mills saw a rise of 5.3%, reaching Rs 504.95 on the BSE, while Dhampur Sugar Mills surged nearly 11%, climbing to Rs 157.9. Shree Renuka Sugars also gained 7.3% to Rs 38.40. Other sugar stocks also saw notable gains, including Bannari Amman Spinning Mills, which climbed 4% to Rs 43, while Uttam Sugar Mills, Dalmia Bharat, and EID Parry India also saw increases, with gains of 6.13%, 2.97%, and 4.05%, respectively.
The rally follows a report from ET Now that the Cabinet Committee on Economic Affairs (CCEA) has approved a price hike for ethanol produced from sugarcane derivatives. Details of the proposal are yet to be known.
Sources confirmed that the price of ethanol made from B-heavy molasses will likely increase by approximately Rs 2 per litre, while the price of ethanol made from sugarcane juice will rise by Rs 1.50 per litre. The cabinet is also likely to regularise incentives provided by oil marketing companies for ethanol produced from C heavy molasses, ET Now reported. This move is expected to enhance the profitability of sugar mills that produce ethanol, as higher ethanol prices directly boost their margins.
Additionally, the government has approved the allocation of Rs 18,000 crore for the Critical Mineral Mission, which further buoyed investor optimism in the sector. This policy push aims to incentivize sugar producers to scale up ethanol production, creating further revenue opportunities in the 2024-25 period.
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Ethanol prices have not been revised since the 2022-23 ethanol supply year, which runs from November to October. Current ethanol prices stand at Rs 65.61 per litre for cane juice-derived ethanol, Rs 60.73 for B-heavy molasses-derived ethanol, and Rs 56.28 for C-heavy molasses ethanol.
Despite an offer of 970 crore litres for the 2024-25 ethanol supply cycle, oil marketing companies have allocated only 837 crore litres of ethanol from the sugar industry, leaving 79 crore litres unallocated. This has raised concerns from the Indian Sugar and Bio-energy Manufacturers’ Association (ISMA) about the potential underutilization of capacity and financial losses for the industry.
India currently blends ethanol into 13% of its petrol supply, amounting to approximately 550 crore litres of ethanol used for fuel by August. The government aims to increase this ethanol blending target to 20% by 2025, which could drive further growth for the sector.
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