Sugar stocks rallied by 6% on reports that the government is considering raising ethanol prices for the 2024-25 season and diversifying feedstocks to meet the 20% blending target by 2025-26.

Sources said a committee headed by a joint secretary from the petroleum ministry has deliberated on aligning ethanol prices with the fair and remunerative price of sugarcane.

This price revision aims to boost production and meet blending goals, following Cooperation Minister Amit Shah’s call for a multi-dimensional approach to biofuel manufacturing. He affirmed that India will reach its 20% ethanol blending target by 2025-26, ahead of the original 2030 deadline.

The prices of ethanol have not been revised since the 2022-23 season, which started in November. At the moment, ethanol produced from sugarcane juice remains priced at Rs 65.61 per litre. Rates for ethanol from B-heavy and C-heavy molasses are fixed at Rs 60.73 and Rs 56.28 per litre, respectively. Traditionally, demands for increasing alcohol prices came from the sugar industry itself.

The expected ethanol price hike could boost the profitability of sugar companies by increasing revenues from ethanol sales, a key byproduct of sugar manufacturing.

Investors reacted positively, driving up the stock prices of major sugar producers like Bajaj Hindustan Sugar, Balrampur Chini Mills, Dalmia Bharat, Awadh Sugar, Mawana Sugars, Shree Renuka Sugar, Triveni Engineering, and Dhampur Sugar by up to 6%.

Balrampur Chini Mills saw a rise in profits thanks to its solid Q1 results. The company sold more sugar at better prices, which boosted its overall performance. With sufficient sugar stocks in India, analysts expect the ethanol-blending program to resume as it did in Sugar Season (SS) 23.

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