Sugar stocks have been rallying this year and could further continue its momentum as Indian Sugar Mills Association has indicated that sugar production could rise 1.5 percent to a record 33 million tonne.

Share Market Live

NSE

Five sugar stocks that rose more than 40 percent this year include Avadh Sugar, DCM Shriram, Triveni Engineering, Balrampur Chini Mills and Uttam Sugar. While other sugar stocks like Dhampur Sugar, Dalmia Sugar, Dwarikesh Sugar and Mawana Sugar gained 10-40 percent year-to-date (YTD).

Maharashtra’s sugar production has reached 10.7 million tonne as on April end and all the mills except one have ended their operations for the season. In Uttar Pradesh, sugar mills have produced 11.26 million tonne, which is 27,000 tonne higher than the production achieved by them last year on the corresponding date, said the apex body.

Out of 119 mills which operated this year, 51 mills have ended their crushing and 68 mills continue their operations now.

Rating agency ICRA in its press release said, “Domestic sugar consumption is likely to increase by 2-3 percent to around 25.8 million metric tonne this year and the production would be higher by at least 6.5-7.0 million metric tonne."

"With the commencement of the cane crushing season, the supply pressures on the prices continue. Prices declined to Rs 31,000/MT (ex-mill Uttar Pradesh) in November 2018 and to Rs 30,000/MT in December 2018. In January 2019, the prices were around Rs 31,000-32,000/MT”, the report said.

Therefore, it can be expected that the rally for the sugar stocks will continue its pace this year ahead. A good monsoon will also add value to the share price of these stocks.

Disclaimer:

CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

First Published:May 31, 2019 3:42 PM IST