The Hindu Business Line : Historic prices at London market push up sugar stocks

Shares of sugar companies led by Balrampur Chini, Bajaj Hindustan, Mawana Sugars, Dwarikesh Sugar Industries, Triveni Engineering Industries and Shree Renuka Sugars flared up by 4-16 per cent on Wednesday on good volumes after the London prices of white sugar futures touched all-time high on Tuesday.

Analysts said sugar companies are expected to post better earnings going forward, thanks to the global sugar cycle turning up and excellent cane crop this season. Indian sugar manufacturers have long been suffering due to low sugar prices and inadequate availability of cane, they point out.

The Union Government's move to extend the ethanol-petrol blending programme across the country from the next sugar season, and further raise the ethanol component from the existing five per cent to 10 per cent from sugar season 2007-08 also augur well for the Indian sugar companies, they said.

"The ethanol programme throws open a significant window of opportunity for sugar players," said Mr Amitabh Chakraborty, Head, BRICS PCG. "We are bullish on the sugar sector for the next one year," he said.

Balrampur Chini was up 6.37 per cent at Rs 182 on BSE. The shares have gained by about 20 per cent over a month's time. Bajaj Hindustan closed at Rs 489.85, up 3.96 per cent from Tuesday. The stock has risen by about 27 per cent from Rs 385.85 over the last one month. Mawana Sugars jumped by 12.24 per cent to Rs 119.65 on Wednesday from the previous close while Dwarikesh Sugar Industries rose by 4.75 per cent to Rs 263.60 on Wednesday. Triveni Engineering flared up by 9.10 per cent to Rs 112.70. The stock, in fact, has risen by 47 per cent over the last one-month period from Rs 76.75. Similarly, Shree Renuka Sugars closed higher by five per cent on Wednesday at Rs 1435 from Tuesday. This stock has risen from Rs 1023.85 (or 40.16 per cent) over the one-month period.

KM Sugars Ltd rose by 15.05 per cent on Wednesday to Rs 69.55 while Ugar Sugar gained by 4.97 per cent to Rs 44.35.

"The shortfall in the world market and higher domestic production have provided India with an opportunity to tap export markets in Sri Lanka, Bangladesh, Pakistan, Indonesia and West Asia, which have a combined annual import demand of 5-6 million tones," said a report by BRICS PCG.

Mr Gaurang Shah of Geojit Financial Services, said the Indian sugar players also have an opportunity to export to lucrative markets such as China. "Brazil, the largest producer of sugar, and Mexico, which now export sugar to China, are turning their attention to ethanol. Indian manufacturers would be in a position to tap the China opportunity in future," he said.

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