Sugar stocks in India—stocks in companies primarily engaged in growing, refining, and selling of sugar—seem to be in a sweet spot. The sector assumes importance as India is among the largest producers and consumers of sugar globally. Some of the factors influencing the fortunes of the sugar industry are global demand, government policy, climate change that determines crop yields, and fluctuations in commodity prices.
As with any other industrial sector, the best sugar stocks in India have the potential to reward investors handsomely. However, it is useful to bear in mind that the industry is rather unstable and highly cyclical. Besides, government policies such as price ceilings, subsidies, and minimum sale price can influence sugar stocks significantly.
Sugar industry in India: A brief overview
India is the world’s second largest sugar producer after Brazil. While there are half a million workers in sugar mills, there are more than 50 million Indian farmers who grow sugarcane..
According to industry body Indian Sugar Mills Association (ISMA), India’s sugar production for 2023-24 is estimated to be above 34 million tons, higher than its previous estimate. Maharashtra is the country’s top sugar-producing state. Uttar Pradesh is another major sugar producing state. Part of the industry’s growth can be attributed to entrepreneurship. Private mill ownership is prevalent in Uttar Pradesh. The farmers jointly own and run the remaining sugar mills, which are run as cooperatives. Haryana is also a top sugar producing state, followed by Karnataka.
As mentioned above, government policy has an outsized influence on sugar stocks in India. To assist the sector in addressing the problem of excess output and low sugar prices, the government sometimes allows the creation of a sugar buffer stock to increase wholesale sugar prices and to improve cash flow to sugar mills. Unlike the buffer stockpiles of wheat and rice, which are overseen by the government through FCI, sugar mills maintain the sugar buffer stock jointly..
Top sugar stocks in India in 2024 by market capitalization
Top sugar stocks have the potential to yield handsome returns to investors. We have curated a list of the best sugar stocks in India for you below.
| Company name | Market Cap (Rs. in cr.) | Close Price (Rs.)* | PE Ratio (%) | 1Y Return (%) | ROCE (%) |
| Eid Parry (India) Ltd | 11,062.01 | 779.50 | 11.68 | 23.15 | 27.77 |
| Shree Renuka Sugars Ltd | 9,503.71 | 50.80 | -48.25 | -5.70 | 17.12 |
| Balrampur Chini Mills Ltd | 7,984.23 | 460.50 | 28.10 | -5.02 | 13.19 |
| Triveni Engineering and Industries Ltd | 7,955.85 | 408.50 | 4.44 | 30.67 | 65.93 |
| PiccadilyAgro Industries Ltd | 6,609.41 | 787.65 | 60.22 | 1,379.62 | 52.88 |
| Bajaj Hindusthan Sugar Ltd | 4,579.33 | 43.17 | -33.99 | 149.31 | 0.74 |
| Bannari Amman Sugars Ltd | 3,381.14 | 3,170.00 | 23.58 | -5.83 | 15.10 |
| Dalmia Bharat Sugar and Industries Ltd | 3,331.06 | 402.35 | 13.32 | 12.51 | 11.94 |
| Dhampur Sugar Mills Ltd | 1,518.95 | 220.25 | 11.31 | -4.48 | 17.42 |
| Uttam Sugar Mills Ltd | 1,365.15 | 328.75 | 11.04 | 31.12 | 29.90 |
*Closing price as of July 26, 2024
Overview of the top sugar stocks in India as per market capitalization
The sugar industry in India has been characterized by the coexistence of many ownership and management systems. One of the biggest sugar industries in the world, Indian sugar stocks enable investors to partake in their growth story. We will discuss the top sugar stocks in detail below.
EID Parry (India) Ltd
EID Parry, one of the largest sugar producers in the country, is part of the renowned Murugappa group. The company also has business interests in nutraceuticals and ethanol business. The company has an operating subsidiary, Coromandel International Limited that has a considerable stake in the agricultural inputs segment that includes biopesticides.
Shree Renuka Sugars Ltd
The company, established in 1995, specializes in manufacturing and purifying of sugar, ethanol, and ethyl alcohol. It produces and supplies power too. The firm is India’s largest sugar refiner. Ethanol-blending policy—blending of ethanol with petrol—is a significant growth driver for sugar stocks such as Shree Renuka.
Triveni Engineering and Industries Ltd
Triveni Engineering & Industries Limited is one of the largest ethanol and sugar producers in India. The company’s recently increased its stake in sugar company Sir Shadi Lal Enterprises to 61.77%. The move is expected to boost Triveni’s sugar and alcohol businesses and speed up its transition to become an integrated producer of sugar and alcohol in India.
Bannari Amman Sugars Ltd
The business segments of Bannari Amman Sugars Limited are windmill, co-generation of power, distillery, granite division and the sugar division. The company’s diversified revenue stream bodes well for the stock.
Piccadily Agro Industries Ltd
PiccadilyAgro Industries Ltd. operates in the sugar and distillery business. It manufactures distillery products and sugar. Sugar, molasses, power, and bagasse are all part of the sugar section. The distillery division generates ethanol, CO2 gas, malt, and alcohol. In February 2024, Piccadily acquired an 89% equity stake in wine maker Nirvana Biosys.
Balrampur Chini Mills Ltd
Balrampur Chini Mills Limited (BCML) is one of the country’s largest sugar manufacturers. It also generates electricity and owns a distillery. In recent years, the company has expanded its production by acquiring other businesses and increasing its capacity to produce sugar with new machinery.
Factors to consider before investing in sugar stocks in India
Considering India’s standing as the world’s second largest producer, some of the best sugar stocks present a good buying opportunity. However, one should consider several factors before making any investments. Here are some of them.
Market conditions
Before investing in sugar stocks, it is important to understand the state of the market. The dynamics of supply and demand for sugarcane, the main raw material, has a significant impact on the country’s highly cyclical sugar sector. The production of sugar is heavily influenced by weather patterns, monsoon patterns, and seasonal changes. Conditions in the home market might also be impacted by export-import regulations and sugar prices globally. Monitoring these elements can assist in determining when investing in the best sugar stocks in India.
Financial performance
To assess the investment potential of sugar firms, one has to analyze their performance diligently. Metrics to look out for include earnings, revenue, gross margins, level of debt, and ROE. Investors should analyze the company’s balance sheet, income statement, and cash flow statement. To assess the stability of the firm, investors should also compare them with industry standards and the past track record of the firm.
Government policies
The sugar industry in India is greatly influenced by government policy. A company’s capacity to make money can be directly impacted by policies about sugarcane prices, import-export laws, subsidies, and ethanol blending requirements. Market volatility may result from the government’s frequent interventions to maintain sugar prices and safeguard farmers’ interests. Making wise investment decisions requires being up to date on policy changes and how they can affect the sector.
Competition
Indian sugar industry is highly fragmented due to the large number of players in the business, ranging from large-scale integrated sugar mills to small regional players. To define the position of the company in the given market and the potential of its further evolution, it is necessary to consider the competition.
Technological advancement
Innovations in technology have a significant impact on productivity and cost-effectiveness in the sugar sector. Improvements in supply chain management, processing technology, and farming methods can boost a business’s profitability and operational effectiveness. Essentially, companies that plan to implement highly developed technologies in the extraction, cultivation, and processing of sugarcane stand to benefit.
Should you invest in sugar stocks?
India ranks high among sugar-producing countries, hence the rising investor interest in sugar stocks in India. Shifts in government policy like export restrictions and price controls affect business profitability.
Furthermore, the industry is vulnerable to climate variations that impact sugarcane productivity and production costs. To reduce risk, investors should diversify their holdings, analyze market patterns, and perform in-depth research. All things considered, sugar stocks in India can offer significant value to an investing portfolio notwithstanding the outsized influence of government policy on the sugar industry.
Bottom line
The strong expansion in the farming sector and the rising demand for sugar and its derivatives make sugar stocks in India an attractive investment proposition. The government’s ethanol blending policies and initiatives, along with its export incentives, boost the outlook for sugar firms. Productivity and profitability are also improved by technological developments and better farming techniques.
