Shares of sugar companies surged up to 10 per cent on the BSE in Wednesday’s intra-day trade on the back of heavy volumes as sugar prices rose to a six-year high on Tuesday, amid concerns over a deficient monsoon. The sugar prices were quoting at their highest level since September 2017.
Among individual stocks, Uttam Sugar Mills hit a 52-week high of Rs 440, as they surged 10 per cent on the BSE on two-fold jump in trading volumes. Dalmia Bharat Sugar soared 8 per cent to Rs 436.40. The stock was trading close to its 52-week high of Rs 440.55 touched on December 19, 2022.
Avadh Sugar & Energy, Shree Renuka Sugars, Magadh Sugar & Energy, EID Parry, Bannari Amman Sugars, Dhampur Sugar Mills, Dwarikesh Sugar, Ugar Sugar Works and Balrampur Chini Mills were up in the range of 2 per cent to 8 per cent. In comparison, the S&P BSE Sensex was up 0.04 per cent at 65,804 at 09:53 AM.
According to a Reuters report, sugar prices in India have jumped by more than 3 per cent in a fortnight to their highest level in six years, traders and industry officials said, as limited rainfall in the country's key growing regions raised production concerns for the upcoming season.
Meanwhile, the Indian government is expected to ban mills from exporting sugar in the next season beginning October, halting shipments for the first time in seven years, as a lack of rain has cut cane yields, the news agency reported last month, quoting government sources.
Post estimates that lower domestic stocks combined with elevated diversion of sugar to ethanol and alcoholic beverages will drive prices higher in the near-term, barring government interventions, Uttam Sugar Mills said in FY23 annual report.
Given sugar inventories are lowest in the last five years, domestic sugar prices have moved higher since April. Further, sugar prices are expected to remain firm until November 2023 (crushing generally starts post Diwali), according to analysts at ICICI Securities.