Balrampur Rajshree Hit 20 Gains What's Behind?

Mumbai, September 9, 2025: On Tuesday, sugar sector stocks rallied sharply, many of them touching upper circuit limits, driven mainly by a government order permitting sugar companies to produce uninterrupted ethanol from sugarcane-based feedstock for the 2025–26 Ethanol Supply Year (ESY).

Stocks Surge 11-20% Across the Sector on BSE

On the BSE, Rajshree Sugar & Chemicals rallied 20% and hit the upper circuit at ₹45.36. Following the same trend, Shree Renuka Sugars moved up 14% to ₹32.80, Uttam Sugar Mills rose 14% to ₹299, while Dhampur Sugar rose 13% to ₹142.20. Magadh Sugar & Energy rose 12% to ₹598.80 and Dwarikesh Sugar Industries rose 11% to ₹44.60. Meanwhile, other sugar-producing stocks such as Balrampur Chini, Avadh Sugar, Sakthi Sugars, Ugar Sugar, Mawana Sugar, and Triveni Engineering recorded healthy 5–10% gains.

Government Allows Unlimited Ethanol from Cane-based Feedstock

From November 1, which is the beginning of the new Ethanol Supply Year (ESY), sugar mills and distilleries will be allowed to manufacture ethanol from sugarcane juice, syrup, and all molasses without any restrictions on volume, as per the notification by the Ministry of Consumer Affairs. However, the government will monitor and regulate the diversion levels from sugar to ethanol to ensure the annual local availability of sugar.

Lower FY25 EBITDA Pressures Despite Stock Gains

But even with the surge in stock prices, sugar firms posted lower EBITDA in FY25, primarily from reduced cane crushing and weaker distillery volumes. Performance was pressured further due to ESY 2023–24 limits on juice and B-heavy molasses, which are used for ethanol production. Experts still believe that margins depend heavily on ethanol prices, guiding the feedstock diversion from sugar to ethanol.

Sugar Output Stability Hinges on Cane Planting, Ethanol Rates

According to the brokerage firm Elara Securities, sugar stocks are seen at 4.9 million tonnes in SS24–25, yet robust cane planting and the expected output are helping to stabilize prices. Profitability could improve if ethanol rates rise, but it may come under strain if state cane prices increase. The FY25 annual report of Balrampur Chini Mills stated that it projected better distillery volumes as the government permitted diversion from cane to juice and B-heavy resumes. Meanwhile, the government’s Ethanol Blended Petrol (EBP) Programme, aiming for 20% blending by 2025–26 and 30% by 2030, reaffirms the policy support for the sugar sector.

Disclaimer:At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations