Sugar rush! 6 sugar stocks hit 52-week high today. What's the good news?

The stocks of at least six sugar companies, including Dhampur Bio Organics and The Ugar Sugar Works, hit a fresh 52-week high today amid expectations around raising sugar export limit and GST reduction on ethyl alcohol.

Rajshree Sugars & Chemicals rallied 20% to hit a fresh 1-year high of Rs 66.7. Sakthi Sugars ended 15.5% higher at Rs 33.25. Others that hit record highs are Dhampur Bio Organics (Rs 229), Ponni Sugars (Rs 455), SBEC Sugar (Rs 70.7) and Ugar Sugar Works (Rs 116).

"Shares of sugar companies rose intraday as news spread that the government might raise the sugar export limit following a January assessment of domestic production. Up till May 31, 2023, the government approved the quota-based export of 60 lakh tonnes of sugar in November," said Mohit Nigam, Fund Manager & Head - PMS, Hem Securities.

Food Secretary Sanjeev Chopra was recently quoted as saying that the ministry will assess the domestic production of sugar in January and then decide whether to raise the quota or not.
In the meantime, the Goods and Services Tax (GST) Council also recommended that the rate of GST on ethyl alcohol supplied to refineries for blending with petrol be reduced to 5% from the existing 18% rate.

This move is expected to enhance sales of the commodity and raise sugar producers' earnings, Nigam said.

Later in the day, the Indian Sugar Mills Association (ISMA) said sugar production has increased 5% to 82.1 lakh tonnes between October 1 and December 15 period of this marketing year, while mills have contracted to export 45-50 lakh tonnes of sweetener. India's total sugar production is expected to be the highest at 410 lakh tonnes (before diversion for ethanol) in the 2022-23 marketing year. Sugar diversion towards production of ethanol is estimated to be at 45 lakh tonnes in the current marketing year.