Sugar stocks soar as govt permits use of sugar in ethanol production; Triveni Engineering, Dhampur Sugar rally over 7%

Sugar stocks were in the limelight on Friday, a day after the government permitted the use of sugarcane juice and sugar syrup for ethanol production in the 2024-25 ethanol supply year (ESY). Shares of Triveni Engineering & Industries jumped 7.62 per cent, Dhampur Sugar Mills rallied 7.55 per cent, Avadh Sugar & Energy zoomed 7.20 per cent and Dalmia Bharat Sugar and Industries surged 5.79 per cent on the BSE.

The stock of Shree Renuka Sugars climbed 5.38 per cent, Praj Industries soared 5.33 per cent, Dwarikesh Sugar (3.77 per cent) and Balrampur Chini Mills (3.46 per cent).

"This spike followed the government's decision to allow sugar mills to use cane juice or syrup to produce ethanol for the ethanol supply year (ESY) 2024-25," Avdhut Bagkar, Technical and Derivatives Analyst at StoxBox, said.

The government on Thursday permitted the use of sugarcane juice and sugar syrup for ethanol production in the 2024-25 ethanol supply year, reversing last year's ban.

In December 2023, the government prohibited the use of sugarcane juice or sugar syrup for ethanol production in the 2023-24 ESY (December-November) to ensure adequate sugar availability for domestic consumption and keep prices in check.

"Sugar mills and distilleries are allowed to produce ethanol from sugarcane juice/sugar syrup, B-Heavy molasses as well as C-Heavy molasses for ESY 2024-25 as per the agreement/allocation with OMCs (oil marketing companies)," the food ministry order said.

The Food Ministry and Petroleum and Natural Gas Ministry will periodically review the diversion of sugar for ethanol production vis-a-vis sugar production in the country to ensure year-round availability of sugar for domestic consumption, it added.

India is the world's second largest sugar producing country after Brazil.