The stock prices in sugar sector skyrocketed over 20% in past two months. Upper Ganges Sugar share price, Mawana Sugars, Oudh Sugar share price, stocks of Ugar Sugar, Dharani Sugar, Dwarikesh Sugar, Uttam Sugar share price, Thiru Arooran Sugars share price and Rajshree Sugar share price rallied up to 350% in the month of June this year.

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Is the sweetness in the Sugar Sector for real?
It has been a very sweet
monsoon for sugar
companies with their
stock prices rallying over
50-200%. Investors have
been scrambling to buy
Sugar companies stock.
But the question is, how
long will the sweetness
last? The month of June
witnessed nine sugar
stocks emerging as
heroes of the street over
the hopes of a good monsoon. The stock prices in sugar sector skyrocketed over 20% in past
two months. Upper Ganges Sugar share price, Mawana Sugars, Oudh Sugar share price,
stocks of Ugar Sugar, Dharani Sugar, Dwarikesh Sugar, Uttam Sugar share price, Thiru
Arooran Sugars share price and Rajshree Sugar share price rallied up to 350% in the month of
June this year. Thirty-four companies posted an aggregate net profit of Rs. 1,408 crores for
the second half of the financial year 2016 in compared to the combined net loss of Rs. 1700
crore in the first half of the financial year. In the financial year 2015, the companies bore the
loss of Rs. 1,268 crore in H2FY15 and Rs. 979 crore in H1FY15.
The table says it all in the nutshell about how the companies have turned around from loss
making to profit making firms. The growth on the quarterly basis is significant, but that on the
yearly basis is massive.
SL INSTRUMENT Price PAT JUN’ 16 PAT MAR’ 16 PAT DEC’ 15 PAT JUN’ 15
1 BALRAMPUR CHINI 118.3 110.7 98.78 87.8 -72.74
2 SAKTHI SUGARS 42.5 79 12.36 -20.05 -22.78
3 DALMIA BHARAT SUGAR 114.9 48.31 56.2 16.95 -9.57
4 DHAMPUR SUGAR 115.8 33.08 111.83 9.2 -88.11
5 DWARIKESH SUGAR 261.1 31.93 52.82 2.84 -56.2
6 EID PARRY 257.75 25.34 267.04 36.79 -186.57

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SL INSTRUMENT Price PAT JUN’ 16 PAT MAR’ 16 PAT DEC’ 15 PAT JUN’ 15
7 UPPER GANGES SUGAR 413.35 22.85 59.94 -4.34 -44.76
8 ANDHRA SUGARS 229.2 19.68 0 5.86 1
9 OUDH SUGAR 99.2 19.2 74.66 12.61 -61.88
10 UTTAM SUGAR 52.3 13.36 67.51 -16.4 -3.72
11 KM SUGAR 13.75 11.43 4.7 3.13 -3.55
12 KCP SUGAR 36.15 10.96 7.25 6.39 -21.85
13 MAWANA SUGARS 47.55 8.65 64.92 -9.03 -30.35
14 RAJSHREE SUGARS 50.55 7.51 29.14 -15.55 -19.89
15 PONNI SUGARS 226.95 2.28 13.4 -1.18 -10.45
16 PARRYS SUGAR 42.25 1.9 19.93 -3.58 -33.81
17 RANA SUGARS 11.8 0.29 46.26 1.45 -18.68
18 BANNARI AMMAN SUGARS 1885.9 NA 48.09 34.09 -60.77
19 KOTHARI SUGARS 15.65 NA 12.13 2.32 -14
20 SHREE RENUKA 16.6 NA 220.2 -45.8 -227.2
21 TRIVENI ENGINEERING 55.45 NA 36.53 8.4 -93.48
22 THIRU AROORAN SUGARS 67.05 -6.61 27.38 -10.18 -26.32
23 DHARANI SUGARS 37.65 -9.16 36.65 -18.65 -16.24
Too less Sugar:
Sugar has not seen the surplus since the deficit ate it up last year. The numbers indicate that
the market has only around two months stock at the beginning of the season. Importing is not
an option either, since the international prices are further firm up. The shortage is genuine and
nothing much can be done to pull the prices down to the ground. Sugar mills are making good
money even at the present prices.
The Bull Run:
The beginning of August this year saw 4% rally in Sugar Stocks after the Union Cabinet
approved the provision of production subsidy to sugar mills based on actual export and supply

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of ethanol. The move helped the mills offset the cost of cane and facilitated timely payment of
cane price dues of farmers. The development led the stocks of Sugar Industry majors on a
flight. KCP Sugar Industries, Empee Sugar, Dhampur Sugar, Dalmia Sugar and Thiru Arooran
Sugar gained most while the stocks of Balrampur chini, Shree Renuka, and Bajaj Hindustan
Sugar gained modest percentage.
The run-up has been sharp. Most of the sugar companies which were probably on a
discounted valuation earlier, have now started to reach a fair valuation.
Drought has resulted in less sugarcane crops leading to the stocking of the sugar, which in
turn, dragged up the price of the commodity. The Bull Run of the Sugar stocks has a fair
chance for two-three years until the surplus sugar production starts.
The table below will baffle by the way the stocks have moved in a year’s time and after the
budget. Numbers express strongly than words, and the numbers say Upper Ganges Sugar
has won the race with Dwarikesh Sugar and KM Sugar following close behind. Every stock
has gone up, some two folds, some lesser.
SL INSTRUMENT 1Y Movt Post Budget
1 UPPER GANGES SUGAR 922.27 556.98
2 DWARIKESH SUGAR 784.04 139.02
3 KM SUGAR 548.78 209.3
4 MAWANA SUGARS 496.55 142.98
5 UTTAM SUGAR 368.08 120.58
6 OUDH SUGAR 367.82 141.38
7 DALMIA BHARAT SUGAR 363.71 83.41
8 RANA SUGARS 341.18 192.21
9 DHAMPUR SUGAR 226.68 103.92
10 RAJSHREE SUGARS 184.91 104.89
11 PARRYS SUGAR 184.45 76.92
12 DHARANI SUGARS 159.47 127.57
13 KOTHARI SUGARS 158.87 79.33
14 SAKTHI SUGARS 154.85 67.86
15 BANNARI AMMAN SUGARS 145.11 75.87

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SL INSTRUMENT 1Y Movt Post Budget
16 BALRAMPUR CHINI 140.39 41.59
17 THIRU AROORAN SUGARS 134.9 102.9
18 ANDHRA SUGARS 133.71 105.68
19 KCP SUGAR 130.19 80.74
20 TRIVENI ENGINEERING 122 36.25
21 SHREE RENUKA 87.13 36.17
22 EID PARRY 80.23 52.94
23 PONNI SUGARS 26.88 30.53
Stealing the Limelight:
Sugar sector has stolen the limelight in the street yet again. After correcting 20% from their
one-year high price, the stocks rallied by 20% on the bourses locking in their upper limit of the
circuit breaker on BSE. Upper Ganges locked in 20% upper circuit and over millions of shares
have been changing hands on both the indices combined. Upper Ganges traded at a record
high and corrected 42% since the close on 17th August 2016. Kesar Enterprises froze on
upper circuits of 20% falling 40% from its one-year high till 17th August 2016.
In the domestic markets, retail sugar prices in the Mumbai market have hiked from Rs. 30 a kg
to Rs. 40 in the last one year. Sugar prices had the last hit these levels long back in mid-2013.
Wholesale prices have gone up from Rs. 2,397 to Rs. 3,691 a quintal in the same period.
Indian Sugar Mills Association have estimated domestic sugar output in the soon-to-be-
concluded 2015-16 crushing season at about 250 lakh tons which are about 11% lower than
last year’s record output of 278 lakh tones. With the annual consumption of about 256 lakh
tons and exports of about 15 lakh tons, recent production estimates mean that industry will flag
off the new sugar season that begins on October 1, 2016, with carry-forward stocks of just 70
lakh tons. Not only is this significantly lower than the 91 lakh tons opening stock last year, but
this would also account for just about 3-4 months’ consumption. The bottom line is Sugar
companies are going to stay benefitted for a coming long time with hiked sugar prices. With
increasing numbers in their Income from operations column, their net profit will keep rising as
well. In a nutshell, this is a good time to buy the stocks or hold on to them if they are already
in the portfolio.

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Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways
are solely the personal views of the research team. Users are advised to use the data for the
purpose of information and rely on their own judgment while making investment decision.
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