From Balrampur Chini to Dhampur, it's a sweet day for sugar stocks today — Here's why

Sugar stocks, including Balrampur Chini Mills, Dalmia Bharat Sugar and Triveni Engineering, gained up to 10 percent on Thursday after analysts at DAM Capital Advisors projected strong growth for the sugar companies on the back of expected higher prices.

Initiating coverage on four sugar companies – Balrampur Chini Mills Ltd, Triveni Engineering Industries Ltd, Dalmia Sugar and Dwarikesh Sugar –the brokerage assigned a ‘buy’ rating on these stocks while projecting potential gains of up to 28 percent in the next 12 months.

 

DAM Capital in a note said that fast developing El Nino conditions are expected to further hamper sugar production in key sugar growing states and keep domestic sugar prices above Rs37 per kg.

“This would benefit Uttar Pradesh-based sugar companies with higher sustainable sugar volume and higher sugar realization,” the brokerage stated.

“Expect sugar companies to witness strong earnings growth for FY23-26E,” it said.

Following the bullish call by the brokerage, Balrampur Chini shares surged nearly 6 percent to a 52-week high of Rs 440.30 apiece on BSE in morning deals. The brokerage expects up to 23 percent upside to the stock with a target price of Rs 510 per share.

Dalmia Bharat Sugar shares rallied around 10 percent to hit a 52-week high of Rs 472.85 on BSE after DAM Capital projected a target price of Rs 540 per share, implying potential upside of up to 27 percent.

Triveni Engineering shares also traded at a 52-week high of Rs 364.75 on BSE in morning deals. DAM Capital sees up to 17 percent potential upside with a target price of Rs 415 per share.

Dwarikesh Sugar shares soared 4.28 percent to hit a high of Rs 97.14 on BSE. The brokerage expects potential upside of up to 29 percent with a target price of Rs 120 per share.