The Hindu Business Line : Rising prices add sweetness to sugar stocks

SHARES of sugar manufacturers, including Ugar Sugar Works Ltd, Oudh Sugar, Sakthi Sugar, Sree Renuka Sugar, Rana Sugars, EID Parry, Bajaj Hindustan and Balrampur Chini Mills, continued to rise on the stock markets on Friday.

Investors are betting on higher earnings from these companies after the sugar prices hit a 16-year high on the international markets this week.

Analysts also expect a favourable policy announcement from the Government to encourage higher levels of ethanol mixing in petrol, which is again seen as an advantage for sugar producers. Ethanol is mainly produced from molasses, a by-product of sugar.

Shares of Ugar Sugar Works Ltd gained by 6.96 per cent over the last week to end at Rs 46.1 on Friday at BSE, while Oudh Sugar shot up by 42.61 per cent over the week to close at Rs 220.05.

Similarly, Sakthi Sugar gained by 16.6 per cent over the week to end at Rs 184 on Friday. The stock jumped by 55.8 per cent over the last one-month period.

Another mid-cap sugar stock Sree Renuka Sugar closed at Rs 772 on Friday, an increase of 9.6 per cent, compared to the last Friday's price of Rs 707.2.

Rana Sugars' shares gained as much as 50.62 per cent over this week to close at Rs 48.95. The counter flared up by 71.45 per cent over the last one-month period.

Shares of bigger players such as Bajaj Hindustan, EID Parry, Balrampur Chini Mills also shot up over the last few weeks.

Bajaj Hindustan's shares closed at Rs 366.75 on Friday, up by 6.23 per cent over the week. The counter jumped by 23.09 per cent in the last one-month period.

EID Parry's shares closed at Rs 253.7 on Friday, an increase of 15.34 per cent over the week.

All the counters witnessed huge turnover as investors expect better times at least for another one-year period.

"We expect the sugar prices to remain at these levels till the next crushing season in September," said Mr Priyanko Panja, an analyst with Edelweiss Securities.

"Currently, India is a net importer of sugar but it can turn out to be a net exporter in the next 2-3 years. This is due to the fact that a lot of sugar processing capacity is being commissioned. Further, increased cultivation of sugar due to good irrigation is a strong growth enabler," he said in a report.