Shares of sugar companies jumped as markets reacted to positive policy signals and sector‐specific tailwinds. For example:
Dalmia Bharat’s stock was up modestly, Shree Renuka nearly +4 % in one session, and Triveni Eng around +3 % on January 16, 2025. More broadly, sugar stocks had surged earlier (up to ~8 % or more) on policy changes allowing broader ethanol production from sugarcane derivatives.
Ethanol policy / blending impetus The government is pushing for higher ethanol blending in petrol (E20 etc.). The sugar industry sees this as a big opportunity, since mills can divert part of their output into ethanol production, often at better margins.
Improved raw‐material and inventory/stock dynamics
With restrictions being eased on what can be used for ethanol, sugar mills are in a better position to manage sugar inventories, reduce their exposure to low margin sugar production or oversupply. Additionally, lower output expectations (due to weather, cane yields) have raised expectations that sugar supply may tighten, which supports pricing.
Higher support/price expectations
Reports suggest the government may raise the minimum support price (MSP) or intervene to support sugar/cane producers, which raises hopes for better margins for mills.
Dalmia Bharat: Large integrated sugar/ethanol business; thus policy tailwinds in ethanol help.
Shree Renuka Sugars: Similarly, exposure to both sugar and allied by‑products (ethanol) means upside when diversion rules ease.
Triveni Engineering & Industries: Though “Engineering” is in its name, it also has sugar & alcohol business segments, which means it too gains from the ethanol + sugar upgrade story.
Positive for the sugar/ethanol ecosystem: Mills, distilleries, equipment suppliers all may benefit.
Even if policy is favourable, actual execution (cane supply, crush/processing efficiency, distillery conversion) matters. Sugar prices remain volatile; if supply is abundant and global sugar prices dip, mill margins can suffer. Regulatory / export risk: Government may restrict exports or change diversion rules if domestic sugar supply becomes tight. Key metrics to monitor: ethanol blending rate achievements, changes in government notifications on sugar/ethanol, sugar cane harvest/production numbers, molasses prices, and margins of mills.
