Sugar stocks sparkle on global cues, ethanol loan

Sugar stocks were buzzing in Tuesday's trade as the price of sugar in the commodity market spiked up on the back of supply constraints globally, and with the government announcing soft loans for ethanol production facilities. Major sugar stocks were up 3 to 5 per cent. 

Government is mulling on incentivizing ethanol production to help stabilize sugar price and also reduce the country's fuel bills by using ethanol blended petrol. A new ethanol package which will provide around Rs. 12,000 crore soft loans to sugar producers is being drafted, said news reports on Tuesday. Government plans to subvent interest for these loans for around five years. Earlier, around 150 sugar mills, mostly from Uttar Pradesh, had applied for loans to invest in greenfield ethanol production facilities. 

Also, in the commodity market, sugar prices rose after scare December rains in Brazil's sugar-producing area. Drought conditions mean less sugarcane output leading to supply deficit in the international markets. 

Reacting to these new developments, the stock of sugar producing companies surged on Tuesday. In the post-lunch session, Balrampur Chini was trading at Rs. 110.80 per share, up by 2.93 per cent, Bajaj Hindusthan was at Rs. 9.23 per share, up by 2.44 per cent, Shree Renuka Sugars was at Rs. 11.50 per share, up by 6.48 per cent, Triveni Engg was at Rs. 50.00 per share, up by 4.49 per cent, EID Parry was at Rs. 219.00 per share, up by 1.74 per cent, Dalmia Bharat Sugar was at Rs. 99.55 per share, up by 4.46 per cent, Dharani Sugars was at Rs. 12.00 per share, up by 3.45 per cent and Rajshree Sugars was at Rs. 25.50 per share, up by 4.08 per cent on BSE.