Stock Under Rs 10: This Penny Stock Set to Soar with Rs 400 Crore Ethanol Expansion

Davangere Sugar is already a key player, with a production capacity of 65 KLPD (Kilolitres Per Day)

Investors, here’s a penny stock with serious potential! Davangere Sugar Company has just announced a bold move to raise Rs 400 crore through a rights issue. This fund will drive the company’s expansion into ethanol production and sustainable energy, positioning it to take full advantage of India’s growing ethanol market.

Incorporated in 1970, Davangere Sugar Company has long been in the business of sugar manufacturing, producing molasses as a by-product from sugarcane. Over the years, it has diversified into co-generation of electricity, becoming a notable player in both sugar production and renewable energy.

Currently, Davangere Sugar boasts an impressive production capacity. Its expansive sugar plant can crush 6,000 tonnes of cane per day (TCD), ensuring significant output. The company also has a robust storage and distribution setup, with five large warehouses capable of storing 60,000 tonnes of sugar, spread over a combined area of 165 acres. 

On the ethanol front, Davangere Sugar is already a key player, with a production capacity of 65 KLPD (Kilolitres Per Day). As ethanol continues to play a pivotal role in India’s green energy transformation. To further bolster its eco-friendly initiatives, the company also operates a 24.45 MW cogeneration power plant, tapping into sustainable power to fuel its operations.

Adding to its growth potential is the recent cooperation between India and Brazil on ethanol production technology. During the G20 Agriculture Ministerial Meeting in September 2024, both nations committed to working together to advance ethanol technology. Brazil, the second-largest ethanol producer in the world, will share its expertise with India, which ranks third globally. 

Why is all of this crucial? India is on the curve of an ethanol boom, driven by the government’s push to achieve 20 per cent ethanol blending by 2025-26. Davangere Sugar is perfectly positioned to capitalise on this, with plans to diversify its ethanol production from sugarcane to maize and other grains. The company is securing large quantities of maize, ensuring uninterrupted production even during the sugarcane offseason.

In FY 2024-25, 51 per cent of India’s ethanol was produced from grains, up from 37 per cent the previous year. Government support for this shift, including a national procurement agency.

Moreover, the company is expanding sugarcane cultivation to 15,000 acres and providing local farmers with subsidized seeds, loans, and modern tools. This initiative ensures a steady supply of raw materials while uplifting the region’s farming community.

As ethanol production in India soars from 173 crore litres in 2019-20 to over 500 crore litres by 2022-23. Davangere Sugar’s strong infrastructure, government backing, and international cooperation with Brazil make it one of the most promising Penny Stocks for investors.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice.