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Tuesday, 10 January 2017


The prices of sugar stocks have jumped on Tuesday, where Sakthi Sugars surged 8.5%, Dharani Sugars surged 5.5%, Balrampur Chini surged 2.9% and has neared its 52 week high levels, Triveni Engineering surged 6.5%, Shree Renuka surged 3.6%, Uttam Sugar surged 8%, while Dwarikesh Sugar soared 6.8%.

The stocks have been zooming for past couple of trading sessions driven by hopes of a rise in mills’ profitability, ahead of the debt recast by the Finance Ministry. The rally in sugar stocks depicts favourable financials in the coming quarters for the companies. Rs 35/kg, the ex-mill sugar price has been paying off the cost of operations so far and a rise would mean bigger EBITDA margins for the companies. Moreover, alteration in debt would lower finance costs and thereby increase profitability of the companies.

The domestic sugar demand will outperform the supply which has been lesser in Maharashtra and Karnataka, but may be offset by production in Uttar Pradesh. With this there seems to be a positive road ahead for the sugar stocks.
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