Sugar stocks turn sweet

Sugar stocks are amongst the top gainers on the BSE. Shree Renuka Sugar is the top gainer, up currently 14% at Rs.15.33. EID Parry is the second big gainer; it hit a new high at Rs.244.65. Dharani Sugars has also hit a new high at Rs.25.95. Other sugar stocks which hit a new high are Dwarkesh Sugar, Empee Sugar, Balrampur Chini, Shakthi Sugars and Simbhaoli Sugars.

Sugar stocks are up as various news reports have come in stating that there is expected to be a major shortage of sugar, domestically and globally. Rating agencies like Icra have stated that they expect a 5% decline in domestic sugar production during 2016. This, plus the compulsory export of 4 MT is expected to create a shortage, with closing stock of sugar to fall from 10.1 MT in SY15 to 7.6 MT in current SY16.

Domestically, this is one more price which we have to worry about along with pulses, rice, vegetables. And that spells good news for sugar companies. Price of sugar which is currently at an average of Rs.24/kg is expected to eventually settle at Rs.34/kg.