Sugar stocks rise significantly in response to the food ministry s order reversing the ban on using sugarcane juice for ethanol production. Bajaj Hindusthan Sugar leads the gains with a 7.7% increase.
Shares of Dhampur Sugar Mills were up 8.22 per cent at Rs 268.45. Bajaj Hindusthan Sugar Ltd advanced 9.22 per cent to Rs 30.55. Balrampur Chini Mills climbed 7.15 per cent to Rs 412.05.
What is the relationship between a recent news report on global wire services which mentioned that candy sales in the US are getting hurt due to lack of supply of sugar and recent government decision to ask sugar mills not to divert sugar cane juice for ethanol production. The answer is, there is a possibility of the spike in the already high price of sugar in global markets. So when the government decided to come out of notification, all the sugar stocks were hit badly and there was a noise about whether the policy of encouraging ethanol might see a slow down. Today there are reports that this order is likely to be reversed with some caveats and would be reviewed every month. Do these headwinds, which might keep coming in the next few quarters, become an opportunity ?
Sharekhan has lowered its price targets between 4-16% in Triveni Engineering & Industries, Balrampur Chini, Dhampur Sugar Mills and Dhampur Bio Organics.
Sharekhan maintained its ‘Buy’ ratings on Balrampur Chini Mills Ltd, Dhampur Sugar Mills Ltd, Triveni Engineering Industries Ltd and Dhampur Bio Organics Ltd for now.