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Best Sugar Stocks to Buy In India 2023

02 Nov 2023

Introduction

Sugar is one of the most widely used ingredients in a lot of food products that we see around us. Starting from the smallest candy to cold beverages and a lot of packaged food products that we see around us contain sugar. But sugar has gone beyond your kitchen table and entered the energy sector.

Sugar crystals are the final product that manufacturing units produce from processing sugarcane. Byproducts like Molasses and Bagasse are released in the process. The amazing thing that many of the sugar companies are using these by-products to generate fuel and power. 

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Sugar Sector in India 

India ranks second globally in sugar production, right behind Brazil. This industry not only contributes substantially to the country's GDP but also offers employment to millions of individuals. Remarkably, sugarcane's contribution to the national GDP is 1.1%, despite being cultivated on just 2.57% of the total cropped area.

Ethanol is derived from molasses, a by-product of the sugar industry. The government has initiated the Ethanol Blended Petrol (EBP) Programme, which mixes this biofuel with petrol to reduce fossil fuel consumption. Currently, 10% ethanol is blended into the petrol we use, but it requires vehicle engine upgrades to comply with ethanol blending fully. 

Reasons why you should invest in the Sugar Industry

  • Profitability through Ethanol Production:

Ethanol production from molasses has enhanced the overall profitability of the sugar industry. Integrating ethanol with gasoline has created a cost-effective and environmentally friendly energy source. The Indian government is ambitiously targeting a 20% ethanol blending rate by 2025.

  • Expanding Soft Drink Industry:

Recent years have seen the demand for soft drinks double in India. This increased demand for soft drinks is a positive catalyst for growth of the sugar industry.

  • Export Opportunities and Competitive Dynamics:

Brazil is a key competitor in the global sugar market and has witnessed significant price fluctuations over the past five years, driven by factors such as weather conditions, global demand, and government policies.  This fluctuating environment will lead to higher exports by India. 

Best Sugar Stocks to invest in 2023

Name of the Company Market Cap (in Rs. Crore)
Shree Renuka Sugars Ltd 10440.21
Triveni Engineering and Industries Ltd 7847.53
E I D-Parry (India) Ltd 8258.09
Balrampur Chini Mills Ltd 8340.29
Dalmia Bharat Sugar and Industries Ltd 3665.82

Shree Renuka Sugars Ltd

Shree Renuka Sugars Ltd is a part of Wilmar Group. Their business division includes integrated sugar mills, where sugarcane is processed to yield sugar, ethanol, power, and organic manures. 

Shree Renuka Sugars produces and sells white/ refined sugar under the brand name Madhur Sugars. Their ethanol is manufactured from the by-products of sugar production and is utilised as a vehicle bio-fuel. The company is also involved in renewable power generation using bagasse for both internal consumption and sale to state grids in India. 

They also manufacture Bhumadur Organic Manure, a nutrient-rich organic product derived from sugarcane press mud and distillery spent wash.

Triveni Engineering and Industries Ltd

Triveni Engineering and Industries Ltd is positioned in the sugarcane-rich region of Uttar Pradesh.  They are  deeply engaged in producing sugar, ethanol, and engineering. 

Their diverse product and service portfolio encompasses premium multi-grade sugar, including refined and pharmaceutical-grade options, with refined sugar constituting 60% of their offerings.

Triveni further extends its expertise in Water treatment, Sewage treatment, Power Transmission Business. They also play a pivotal role in the defence industry, manufacturing critical gearboxes, turbines, and pumps.

E I D-Parry (India) Ltd

EID Parry offers a diverse portfolio encompassing sugar, ethanol, bio-products, and nutraceuticals. Furthermore, EID Parry holds a significant stake in Coromandel International, a prominent fertiliser company. This strategic diversification empowers them to harness synergies across various sectors.

Balrampur Chini Mills Ltd

Balrampur Chini Mills Limited (BCML) stands as one of India's largest integrated sugar companies. It also operates in the distillery and power cogeneration segment.

The company operates ten manufacturing plants in Eastern and Central Uttar Pradesh, spanning Balrampur, Babhnan, Tulsipur, Akbarpur, Gularia, Maizapur, Mankapur, Rauzagaon, Haidergarh, and Kumbhi. 

BCML has an impressive crushing capacity of approximately 80,000 TCD daily, solidifying its position as a key player in the sugar industry.

Dalmia Bharat Sugar & Industries 

Dalmia Bharat Sugar & Industries primarily focuses on sugar production, power generation, industrial alcohol manufacturing, and refractory product manufacturing. 

Remarkably, it stands out as one of the most youthful and largest sugar companies in India, earning its reputation as the fastest-growing enterprise in the sugar sector, with a strong presence in both Uttar Pradesh and Maharashtra.

Conclusion

As we have mentioned above, the future of the Sugar sector looks promising. Hence, investing in sugar stocks is likely to be a rewarding experience for investors who will take out the time to understand the sector and the factors that drive its performance. 

 

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