Sugar stocks surge: Balrampur Chini, Dalmia Bharat hit 52-week highs as analysts remain bullish
Dalmia Bharat Sugar and Dwarikesh Sugar jumped 7% to 13% on Thursday's session following brokerage DAM Capital Advisors Ltd's bullish stance on the sugar companies on the backdrop of rising sugar prices. The brokerage stated in its report said that increased sugar prices and rising ethanol volumes would lead to significant profitability growth for sugar producers.
Following the brokerage's upbeat outlook for the sugar sector, shares of Dalmia Bharat Sugar and Industries and Balrampur Chini Mills rose to a 52-week high on Thursday, during the trade. “We believe sugar companies would see strong earnings growth on the back of higher sugar prices and increase in ethanol volumes owing to completion of large distillery capacity expansion, Given sustainable crop pattern in UP due to easy availability of water, sugar companies would be bigger beneficiary of higher sugar prices.
We initiate coverage on Balrampur Chini, Triveni Engineering, Dalmia Bharat Sugar and Dwarikesh Sugar in the sector," said the brokerage in its report. Also Read: Sugar stocks rise sharply, get a boost from the launch of Global Biofuel Alliance by PM Modi at G20 Summit The brokerage further noted in its report that due to lower sugarcane yields in Maharashtra and Karnataka, gross sugar production decreased to 37.3 mt in 2022–2023.
According to DAM Capital analysts, rapidly emerging El Nino conditions will further hinder the states' ability to produce sugar and will keep domestic sugar prices over ₹37/kg. This would help UP sugar firms by increasing the volume of sustainable sugar and sugar realisation.
“We expect sugar companies to witness strong earnings growth for FY23-26E. We initiate coverage on the sector with a positive outlook," added the
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