Sugar Stocks

Sugar is an important addition to multiple food items in both India and abroad, especially in processed food. In modern times, sugarcane is also extensively used in producing ethanol that can be added to petrol for the automobile industry. According to the Indian Sugar Mills Association, 3.65 crore tonnes of sugar will be produced during the 2022-2023 sugar season. As per the Ministry of Consumer Affairs data from that year, 35 LMT of sugar was allocated for ethanol production in 2022, while sugar mills produced 359 LMT of sugar.

The key factors influencing the sugar sector are government regulations, sugarcane availability, and production cost. The key metrics used to assess sugar companies are operating efficiency, their relationship with farmers, and their location. The Central Government, in its National Bio-fuels Policy, 2018, mandated 10 per cent blending of ethanol into motor fuel by 2022 and 20 per cent by 2030.

Despite the pandemic restrictions and the disrupted supply chain, the Indian cane sugar market grew due to the increasing demand for sugar in the country. Due to the increase in demand for organic and naturally derived products, demand for organic sugar is also growing in India. Additionally, Indian organic sugar is used in most ayurvedic medicines and potions made in India. India’s cane sugar market is expected to expand at a CAGR of 5.2% from 2024 to 2029.

India is the world’s largest producer and consumer of sugar and has an expanding population. Sugar is a major ingredient in several low-cost and premium processed foods. Hence, over the medium term, demand is anticipated to rise.

1. Check for Profitability: Prioritise companies that can remain profitable. Remember, external factors, like the costs of raw materials such as sugarcane, fertiliser, processing costs, etc., can impact profitability in the sugar sector. Check for an emphasis on technology for operational efficiency.
2. Financial Fitness: Understand the financial health of individual companies. Scrutinise profitability, cash flow, and capital efficiency to assess their operational strength.
3. Competitive Landscape: Map the major players in the Indian sugar market and their market shares. Prioritise established brands with proven track records, but stay alert to potential disruptors.
4. Align with Your Goals: Consider your investment timeframe and objectives. Long-term capital appreciation requires companies with strong market positions and long-term growth potential.

Investing in sugar sector stocks via Angel One is easy. Simply follow these steps:

1. Log in to your Angel One account.
2. Click on the search icon and look for your desired sugar sector stock.
3. Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
4. To complete your transaction, click on the ‘Buy’ button.

If you don’t have a Demat account with Angel One, you can open one for free online within minutes.