Sugar stocks have been on a roll lately. Amid the ongoing upward trend, shares of one of India’s largest sugar companies, Shree Renuka Sugars Limited, have generated multibagger returns for its shareholders over the past year.
Over the past year, the share price has risen from Rs 9.9 to Rs 53.60, recording a return of around 440% over this period. An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 27 lakh today.
The stock ended up 0.77% at Rs 52.25 against the previous close of Rs 51.85 on BSE. With a market capitalization of over Rs 11,000 crore, the shares are above the 20-day, 50-day, 100-day and 200-day moving averages but below the 5-day moving averages.
In a recent report, CareEdge Research noted that an important driver for the sugar industry in India is the Ethanol Blended Petrol (EBP) program which aims to reduce the sugar glut situation in India.
The EBP program supports the diversion of sugar cane and surplus sugar into the manufacture of ethanol which has now become the focal point for the future of the sugar industry. The government also publishes purchase prices for ethanol to divert sugarcane to ethanol production.
“As of March 31, 2022, India has averaged a blending percentage of 9.6% since December 2021. As of March 27, 2022, 131.7 crore liters of ethanol has been supplied against the total amount of LOI of 416.3 crore liters where the contractual quantity was 402.7 crore liters In June 2021, the government advanced the target of reaching 20% ethanol in petrol by 2025 from 2030 earlier “, he added.
Brokerage Sharekhan also pointed out that the government’s support for increasing the ethanol blend to 20% by SS2025 provides an additional opportunity to improve medium to long-term growth prospects.
He also mentioned that the increase in international sugar prices would help Indian companies to get better export realization for their products.
ICICI Mutual Fund, fund manager Rs 4.75 lakh crore also bought shares of Shree Renuka Sugars in March. The country’s major mutual funds were seen exhausting some downbeat and underperforming stocks in March, coupled with buying select stocks.
Meanwhile, India’s sugar exports jumped 291% to $4.6 billion in the 2021-22 financial year, according to government data released on Monday. Exports increased from $1.2 billion in fiscal year 2013-2014. According to DGCI&S data, India exported sugar to 121 countries across the world.
In particular, India is the world’s second largest sugar producer after Brazil. Since 2010-2011, India has consistently produced a surplus of sugar, far exceeding national needs.