BSE update: Shree Renuka Sugars surges 7% to ₹51.50

Shares of sugar companies experienced significant gains during Friday morning trading on September 27, as news emerged regarding potential increases in both ethanol prices and the minimum selling price of sugar. Food Minister Pralhad Joshi announced that the government is actively contemplating these changes, prompting investor optimism.

Government proposals for ethanol and sugar prices

The government is considering raising the price of ethanol for the 2024-25 season, with the petroleum ministry currently reviewing the matter. Minister Joshi stated, "The proposal on hiking the ethanol price is under consideration of the government." Additionally, he mentioned the potential increase in the minimum selling price of sugar, which has remained fixed at ₹31 per kg since February 2019.

Positive outlook for sugar production

Joshi also provided an encouraging forecast for sugar production in the upcoming 2024-25 season (October-September), attributing it to favourable monsoon conditions. This optimism is likely to bolster confidence among share market investment enthusiasts, further driving up stock prices in the sugar sector.

Ethanol prices, regulated by the government, have not seen an increase since the 2022-23 supply year (November-October). Currently, the pricing structure for ethanol is as follows: ethanol produced from cane juice is priced at ₹65.61 per litre. In contrast, rates for ethanol from B-Heavy and C-Heavy molasses are set at ₹60.73 and ₹56.28 per litre, respectively.

Notable stock performances

Several sugar companies reported notable stock performances during this trading session. Shree Renuka Sugars saw its shares rise by 7% to ₹51.50 on the BSE. Triveni Engineering and Industries increased nearly 4% to ₹489.80, while Balrampur Chini Mills experienced a 7.5% jump, trading at ₹658.50. Praj Industries also saw a rise of 7.54%, trading at ₹817.45 on the NSE.

Regulatory changes in the sugar sector

Earlier this August, the food ministry indicated plans to overhaul nearly six decades of regulations governing sugar production, storage, and pricing to better align with technological advancements. The Ministry of Consumer Affairs, Food, and Public Distribution has introduced the draft 'The Sugar (Control) Order, 2024', aiming to review the outdated Sugar (Control) Order of 1966.

The ministry stated, "...there are multiple changes in the sugar sector that necessitate the revamping of the existing Sugar (Control) Order, 1966," signalling a commitment to modernising regulations to reflect current industry standards.

Key takeaways

• Sugar companies, including Shree Renuka Sugars and Balrampur Chini Mills, saw share price increases following government announcements.
• The government is considering raising ethanol prices and the minimum selling price of sugar.
• Positive monsoon conditions are expected to enhance sugar production for the 2024-25 season.
• Regulatory changes are underway to modernise the sugar industry, focusing on production and pricing strategies.

Investors interested in share market investments should monitor developments in the sugar sector closely, as these changes could significantly influence market dynamics.