Explained – Why sugar stocks like Balrampur, Dhampur and peers are having a sweet day

Shares of sugar companies climbed by as much as 10% during Wednesday’s trading session. Sugar stocks that captured investors eyeballs included Balrampur Chini Mills, Uttam Sugar, Dwarikesh Sugar Industries, Dhampur Sugar Mills, Rana Sugars, EID Parry India, Shree Renuka Sugars, Bajaj Hindusthan Sugar, among others.India produced 23.8 million tonnes of sugar as of Saturday, accounting for 90.15% of the production estimate for 2024-25 (Oct-Sept), the Indian Sugar and Bio-Energy Manufacturers Association said on Tuesday. The trade body has pegged the net sugar output for the current season at 26.4 million tonnes.

As of Saturday, 200 sugar mills, which is 38% of total mills, have been working in the country, ISMA said. In Uttar Pradesh, nearly 75% of factories are running, with improved cane recovery expected to extend the crushing season until April, ISMA said in a release.”Although Maharashtra and Karnataka experienced lower cane yields, operations in select Karnataka mills are likely to resume during a special season in June or July 2025. Mills in Tamil Nadu are also set to operate during this period, contributing to sugar production,” according to the release.

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Last week, ISMA cut its estimate on sugar production in 2024-25 to 26.40 million tonnes from 27.30 million tonnes earlier. The sugar production in 2024-25 is estimated to fall 17.2% on year from 31.90 million tonnes last year. The trade body lowered its estimate amid lower output in major producing states Maharashtra and Uttar Pradesh.

On the upcoming season, ISMA said it has a positive outlook for 2025-26, backed by favourable weather conditions and improved planting. “In Uttar Pradesh and other northern states, efforts to replace cane varieties are already showing promising results,” the sugar trade body said. This is expected to boost yields and recovery rates, contributing to robust sugar production next season, it added.