Sugar stocks rally up to 7% on expectation of higher sugar prices
Recently, Switzerland-based trader Avlean said that it expected a shortage of sugar supply this year due to expected lower production in India, the second-largest sugar producer in the world after Brazil.
Shares of leading Indian sugar companies continued to witness positive momentum on Monday (September 25), rallying up to 7 percent in trade amid expectations of higher sugar prices going ahead.
At 10:09 AM on BSE, the Balrampur Chini Mills Ltd stock was trading up 5.1 percent to Rs 435.30 apiece, Dalmia Bharat Sugar and Industries Ltd was up 4.5 percent to Rs 447.30, Dwarikesh Sugar Industries Ltd surged 6.6 percent to Rs 107.40, while Uttam Sugar Mills Ltd surged 6.6 percent to Rs 440.65 apiece.
Shree Renuka Sugars Ltd was also trading higher by 3.9 percent at Rs 56.39 per share, Avadh Sugar and Energy Ltd was up 4.5 percent to Rs 690.85, Dhampur Sugar Mills Ltd gained 4.2 percent to Rs 314, Triveni Engineering and Industries Ltd rose 3.5 per cent to Rs 394.40, Mawana Sugars Ltd was up 3.7 percent to Rs 114.50 and EID Parry (India) Ltd inched up 1.5 per cent to Rs 542.30 apiece.
Last week, the Centre issued orders for mandatory disclosure of the stock position of sugar for traders/wholesalers, retailers, big chain retailers and sugar processors as a proactive measure to combat hoarding and curb unscrupulous speculation in the sugar market.
The government said that the information will have to be updated every Monday on the portal of the Department of Food and Public Distribution.
The move comes after reports emerged earlier this month about a possible sugar supply shortage this year due to lower production.
According to reports, recently, Switzerland-based trader Avlean said that it expected a shortage of sugar supply this year due to expected lower production in India, the second-largest sugar producer in the world after Brazil.
Avlean reportedly stated that global markets may face a deficit of 5.4 million tonnes of sugar in the coming season.
Following the reports, analysts at DAM Capital Advisors projected strong growth for sugar companies on the back of expected higher prices due to supply shortage.
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, projecting potential gains of up to 28 percent in the next 12 months.
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