Ethanol Penny Stock at Rs 6: Reports 40% PAT Growth in 9MFY25
The sugar and ethanol industry has increasingly benefited from supportive government policies
The NSE benchmark Nifty50 concluded the final trading session of the week with a modest decline of 0.50 per cent. On a weekly basis, the index extended its losing streak for the third consecutive week, registering a nearly 0.5 per cent drop. The market continues to witness selling pressure from Foreign Institutional Investors (FIIs), while Domestic Institutional Investors (DIIs) maintain their buying momentum.
One stock gaining attention is a penny stock priced at Rs 6, which has come into focus following the announcement of its financial results.
Davangere Sugar Company Limited (DSCL), a company diversifying its portfolio beyond sugar to include sustainable power and ethanol solutions, held its board meeting on January 18, 2025, to approve the unaudited financial results for the quarter and nine months ended December 31, 2024.
Financial Highlights
- Quarterly Performance:
The company’s total income for Q3FY25 rose to Rs 7,358.37 lakh, up from Rs 3,977.63 lakh in Q2FY25. Revenue from operations showed significant growth, increasing from Rs 3,932.93 lakh to Rs 7,317.75 lakh. Profit before tax surged from ₹178.91 lakh in Q2FY25 to Rs 746.04 lakh in Q3FY25, driven by strong operational performance.
- Nine-Month Performance:
Revenue from operations for the nine months ended December 31, 2024, stood at Rs 15,928.09 lakh. Profit After Tax (PAT) rose by 40 per cent, from Rs 768.48 lakh in 9MFY24 to Rs 1,076.14 lakh in 9MFY25.
In September 2024, the company’s board approved raising up to Rs 400 crore through a rights issue, offering equity shares with a face value of Rs 1 each to eligible shareholders.
To enhance ethanol production, the company plans to procure larger quantities of maize from across India. This aligns with the government’s push to encourage ethanol production from grain, including maize. The establishment of a National Coordinating Agency (NAFED) to ensure a consistent maize supply is expected to benefit sugar factories, including DSCL, by supporting year-round operations.
The sugar and ethanol industry has increasingly benefited from supportive government policies. In FY2024, grain-based ethanol accounted for 37 per cent of total production, rising to 51 per cent in FY2025. This trend underscores the growing importance of grain-based ethanol in the energy mix.
DSCL actively collaborates with farmers in surrounding villages, providing subsidized sugarcane seeds and inputs to enhance yields. The company aims to expand sugarcane cultivation to 15,000 acres in the upcoming season, including in non-traditional cane-growing regions. Through financial assistance and access to modern agricultural resources, DSCL seeks to ensure timely and fair returns for farmers while supporting socio-economic growth.
Since its establishment in 1970 in Kukkuwada, Karnataka, DSCL has played a significant role in the region’s development. Today, the company operates a 6,000 TCD sugar plant and a 65 KLPD ethanol facility, emphasizing its commitment to sustainable energy. Its 24.45 MW co-generation power plant further reflects its focus on green energy and zero-waste principles.
The company’s infrastructure includes five large warehouses with a storage capacity of 60,000 tonnes of sugar, ensuring efficient supply chain management.
Disclaimer: The article is for informational purposes only and not investment advice.