Avadh Sugar, Balrampur Chini to Dalmia Bharat: Sugar stocks soar up to 15% after THIS govt order on ethanol production

Sugar stocks: The government's decision to eliminate all limits on ethanol production from sugarcane juice, sugar syrup, and molasses for the ethanol supply year 2025-26 gave a leg up to sugar stocks in trade on Tuesday, September 1.

Stocks of sugar companies like Shree Renuka Sugars, Avadh Sugar & Energy, Bajaj Hindusthan Sugar, Balrampur Chini Mills, Dalmia Bharat Sugar, Dhampur Sugar Mills, KM Sugar Mills, and Dwarikesh Sugar Industries surged by as much as 15% during Tuesday's trading session.

This policy change, announced on September 1, 2025, permits sugar mills and distilleries to manufacture ethanol without any quantitative restrictions, reversing a limitation imposed in the 2023-24 ethanol supply year due to reduced sugarcane availability.

This is a considerable relief for the sugar industry. Sugar mills will now have the opportunity to utilise their stock of B-heavy molasses. This will assist in reaching the goal of increasing the proportion of fuel in gasoline mixtures to 20%.

Simultaneously, officials will regularly assess the amount of sugar allocated for ethanol production to ensure that there is enough supply available for domestic use.

In the new ethanol supply year commencing on November 1, sugar mills and distilleries are permitted to produce ethanol without any numerical limitations, as stated by the Ministry of Consumer Affairs, Food & Public Distribution, according to reports.

With sufficient monsoon rainfall improving the prospects for sugarcane production in the upcoming season, this decision is anticipated to benefit sugar companies by increasing their ethanol production, aiding India's goal of achieving 20% ethanol blending in petrol by 2025, and possibly reaching 30% in the future, as per reports.

Seema Srivastava, Senior Research Analyst at SMC Global Securities, said that the sugar sector is witnessing a significant upswing today, driven by the government's bold move to lift ethanol production caps. This decision empowers sugar companies to maximise their ethanol production capacity, capitalising on favourable crop conditions.

“The removal of caps is expected to enhance profitability for sugar mills, as they can now divert more cane juice or B-heavy molasses towards ethanol production, which offers better realisations. With this development, sugar stocks are likely to see a sustained rally, buoyed by improved margins and a positive long-term outlook for the sector,” said Srivastava.

Sugar Stocks: Technical Views

Ruchit Jain, VP - Equity Technical Research, Motilal Oswal Financial Services, believes that sugar stocks have rallied higher in today's session, led by high volumes. Since the stocks have consolidated in a range in the recent past, the positive news flows along with the positive broader market momentum could lead to a short-term upmove, according to Jain.

According to Osho Krishan, Sr. Analyst, Technical & Derivatives, Angel One, the sugar sector has been experiencing a period of stagnation until recent announcements regarding the requirement for ethanol, which have generated renewed momentum within the industry. “Various companies in the sector have started gaining momentum and are likely to continue doing so in the near future. However, one must adopt a firm risk management while trading in the sector and focus on stock-specific moves,” Krishan said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.