Sugar stock rally on ethanol push: Rajshree tops chart at 20%; industry cheers govt move

Sugar stocks turned into a sweet spot for investors on Tuesday as shares of leading mills surged sharply, buoyed by the government’s decision to allow ethanol production without any quantitative restrictions in the 2025-26 marketing year beginning November.Rajshree Sugars & Chemicals hit the upper circuit with a 20 per cent jump on the BSE, while Shree Renuka Sugars rallied 12.7 per cent and Dwarikesh Sugar gained 12.5 per cent. Dhampur Sugar climbed 10.4 per cent, Sakthi Sugars advanced 8.3 per cent, and a host of other counters including Avadh Sugar, Balrampur Chini Mills, Bajaj Hindusthan Sugar, Mawana Sugars and Uttam Sugar also ended higher, PTI reported.Analysts attributed the rally to the ethanol policy tweak. “Sugar stocks rallied on relaxed ethanol norms,” said Vinod Nair, Head of Research at Geojit Investments. Vikram Kasat of PL Capital added, “Sugar companies rallied after the government allowed ethanol production without quantitative restrictions from November.”The food ministry had notified that mills and distilleries can produce ethanol from sugarcane juice, syrup and molasses without caps from the upcoming Ethanol Supply Year (November–October). The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) estimates that nearly 5 million tonnes of sugar can be diverted for ethanol production in 2025-26.“This is a positive development considering higher sugar production next year. It will help mills balance stocks, keep prices in check and ensure timely cane payments to farmers,” ISMA Director General Deepak Balani told PTI.