Stock Under Rs 10: This Stock Set to Benefit from India's Ethanol Blending and Sugarcane Acreage Expansion

Company announced an expansion of its grain distillery capacity by 45 KLPD, investing Rs. 54 crores in the project

Davangere Sugar Company Ltd., a prominent player in sugar production, sustainable power, and ethanol solutions, stands to benefit significantly from India's recent push to accelerate its ethanol blending targets. Union Minister for Petroleum and Natural Gas recently announced that India has achieved a 15 per cent ethanol blending rate as of May, with a goal to reach 20 per cent by 2025. Originally set for 2030, this new target underscores India's commitment to transforming its energy landscape.

New Opportunities for Davangere Sugar Company Ltd.

For companies like Davangere Sugar Company Ltd., which has diversified its portfolio to include sustainable power and ethanol solutions, this development opens up promising opportunities. The increased ethanol blending target is likely to drive higher demand for ethanol, a by-product of sugarcane, benefiting companies in the sugar industry, including Davangere Sugar Company Ltd.

Expansion and Investments

Recently, Davangere Sugar Company Ltd. announced an expansion of its grain distillery capacity by 45 KLPD, investing Rs. 54 crores in the project. With financial arrangements finalized and Rs. 2 crore already invested in civil works, the company is negotiating with machinery suppliers to mark a significant milestone for both the company and the local agricultural community.

Increased Sugarcane Acreage

Official data reveals a 4.5 per cent increase in sugarcane acreage this year, providing sugar mills with more raw material for the 2024-25 crushing season. Favorable weather conditions in major sugar-producing states like Uttar Pradesh and Maharashtra have resulted in a promising crop, potentially benefiting sugar companies.

Strategic Goals and Community Impact

Davangere Sugar Company Ltd. has set a target to expand sugarcane cultivation by 15,000 acres. By promoting and developing sugarcane crops in both existing and new cultivation areas, the company aims to ensure a sustainable raw material supply while delivering socio-economic benefits to local farmers.

Market Conditions and Policy Implications

The long-term effects of accelerated ethanol blending targets and increased sugarcane acreage on the industry will depend on various factors, including market conditions and policy implementations. There are also expectations within the industry for an increase in the Minimum Support Price (MSP) for sugar, which the government may consider.

Commitment to Innovation and Sustainability

Since its inception in 1970, Davangere Sugar Company Ltd. has been an integral part of Kukkuwada, Karnataka's development. The company has continuously innovated, expanding its product portfolio to include sustainable power and ethanol solutions, reflecting a blend of tradition and modernity.

Facilities and Capabilities

Davangere Sugar Company Ltd. currently operates with a capacity of 6000 TCD (Tonnes of Cane Crushed per Day) at its expansive sugar plant, situated on approximately 165 acres. The company has five large warehouses capable of storing 60,000 tonnes of sugar, ensuring robust storage and distribution capabilities. Additionally, with a 65 KLPD capacity, the company produces ethanol and operates a 24.45 Megawatt co-generation power plant, highlighting its commitment to green energy and sustainability.

Enhancing Shareholder Value

Davangere Sugar Company Ltd. is deeply committed to enhancing shareholder value through sustainable practices. By prioritizing environmental stewardship and community engagement, the company aims to create value while safeguarding the planet for future generations. Davangere Sugar Company has a market cap of Rs 854 crore and the stock closed at Rs 9.08 in the last trading session.

Disclaimer: The article is for informational purposes only and not investment advice.