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Best Sugar Stocks in India

29 December 20236 mins read by Angel One
Sugar is no longer just an additive to food - it has widespread uses in alcohol and biofuels production. Sugar stocks thus have a bright future ahead in a green economy.
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What Are Sugar Stocks?

Sugar stocks are shares in companies involved in the production, processing, and distribution of sugar and related products like ethanol and electricity. They offer a way to gain exposure to the sugar industry’s growth and potential fluctuations in sugar prices.

Why Invest in Sugar Stocks in India?

The following are some of the advantages of investing in sugar stocks in India:

 

  1. Large Market: India is a major consumer of both sugar and products with added sugar. It also has a large area with fertile soil and water supply where sugarcane can be grown, allowing sugar companies to get cheap raw materials.
  2. Potential for Growth: This demand is expected to rise due to population growth, increasing consumption and expanding food processing industries. This creates a strong market for sugar companies. 
  3. Ethanol Production: Adding to the previous point, many sugar companies also produce ethanol, which is blended with gasoline and offers an alternative energy source. This diversification can add to the company’s value and provide additional income streams.
  4. Diversification: Investing in sugar stocks can diversify your portfolio and provide exposure to a new industry.

If you are interested in the top sugar-producing stocks that may give you high returns, check out the section below.

List of Top Sugar Stocks in India 

The following are some of the top sugar companies in India:

Name of the Stock 5-Year CAGR P/E Ratio ROCE (in %) Debt-to-equity
Magadh Sugar & Energy 60.64 11.23 8.76 0.32
Gayatri Sugars  57.16 13.46 128.88
Dhampure Speciality Sugars 49.75 16.47 1.63 0.00
Triveni Engineering and Industries 48.52 18.32 17.53 0.15
Ugar Sugar Works 47.44 14.43 27.32 1.31

Note: The data is taken as of December 6, 2023. The rankings are done based on 5-year CAGR.

  • Magadh Sugar & Energy

The company focuses on producing and selling sugar, its byproducts, and denatured spirits, including ethanol. It is a part of the K. K. Birla Group of Sugar Companies.

  • Gayatri Sugars 

Established in 1995, Gayathri Sugars manufactures sugar and related products and operates a power generation unit. It offers a range of products, including commercial sugar, green power, distillery products, and hand sanitizers. 

  • Dhampure Speciality Sugars

The company produces, processes, deals in, imports, and exports all kinds of sugar products, including inverted sugar, raw sugar, gur, and khandsari. It has also diversified its offerings into health snacks, baking essentials, Gur-based sweets, jams, preservatives, mouth fresheners, and various types of sugars.

  • Triveni Engineering and Industries

It is an integrated and diversified conglomerate specialising in sugar, ethanol, and engineering. It is strategically located in sugarcane-rich regions of western and central Uttar Pradesh. It also ranks among India’s top 3 sugar manufacturers and the second-highest ethanol supplier.

  • Ugar Sugar Works

Founded in 1939, the company manufactures and sells sugar, industrial and potable alcohol and generates and distributes electricity. It operates in a long-standing tradition of sugar production and diversification.

In addition to the above list, some more sugar-producing companies have a major market capitalisation:

 

Name of the Stock 5-Year CAGR P/E Ratio ROCE (in %) Debt-to-equity
Shree Renuka Sugar 34.74 9.41
EID Parry 22.94 9.69 27.36 0.13
Balrampur Chini Mills 33.96 16.06 10.42 0.17
Bajaj Hindusthan 26.47 0.91 0.97
Dalmia Bharat Sugar & Industries 35.34 11.18 12.17 0.14

Note: The stocks have been chosen based on their market capitalisation as of December 6, 2023. 

Factors To Consider Before Investing in Sugar Stocks

  1. Market Conditions: Global commodity prices and demand dynamics significantly impact the performance of sugar stocks. A thorough understanding of the broader economic environment is thus crucial for informed investment decisions.
  2. Supply and Demand: Sugar prices are highly volatile due to fluctuations in supply and demand. Understanding the factors influencing these dynamics is critical for predicting future sugar stock price movements.
  3. Government Policies: Government policies can significantly impact the sugar industry, particularly regarding subsidies, tariffs, and trade agreements. Evaluating the regulatory environment is important when investing in sugar stocks.
  4. Financial Performance: Assessing a sugar company’s financial performance before investing is essential. Analyse factors such as revenue growth, profit margins, and debt levels to gauge the company’s financial health.
  5. Competitive Landscape: The sugar industry is highly competitive, with numerous players vying for market share. Understanding a company’s competitive position relative to its peers is crucial for making informed investment decisions.

Sugar Industry in India

The sugar industry in India holds a significant position in the country’s agricultural and economic landscape. It is well known for its historical importance and contribution to rural development; the industry plays a vital role in job creation, rural income generation, and the overall growth of the Indian economy.

The country’s diverse agro-climatic conditions, with an adequate supply of freshwater via rivers and monsoon rains, provide an ideal environment for sugarcane cultivation. States like Maharashtra, Uttar Pradesh, Karnataka, Gujarat, and Tamil Nadu are the leading sugarcane-producing regions.

India is the world’s second-largest producer of sugar. After Brazil, the nation produced around 30 million metric tonnes of sugar. India not only ranks among the top three countries in the world for sugar production, but it also has the highest global sugar consumption.

Future of the Sugar Industry

The ‘National Policy on Biofuels’ notified by the Government in 2018 had set an indicative target of 20% ethanol blending in petrol by year 2030, which was later advanced to 2025-26. The government’s initiatives to promote ethanol production have played a pivotal role in fostering the growth of the industry and generating new employment prospects. In addition, the growing food and beverage processing industries, such as the alcohol and soft drinks industry, which use added sugar, also act as an avenue for growth.

Final Words

If you enjoyed reading this article, follow the Angel One blog for more such articles. If you are new to the stock market, open a free demat account with Angel One and explore seamless investing.

Disclaimer: This article is written for educational purposes only. The securities mentioned are examples and not recommendations.

 

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