Financial Daily from THE HINDU group of publications
Saturday, Nov 12, 2005
Financial Daily from THE HINDU group of publications Saturday, Nov 12, 2005 |
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Markets
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Stock Markets Agri-Biz & Commodities - Sugar Firm price, expansion plans push up sugar stocks Our Bureau
Kolkata , Nov. 11 MARKET continues to find sweetness in sugar stocks on their growth prospect. Majority of the listed sugar stocks moved up today with volumes. Bannari Amman gained by 5.82 per cent to Rs 780. Balrampur Chini, Dhampur Sugar and Bajaj Hindusthan also closed firm. According to analysts, the decent price rise, increased availability of cane for crushing, expansion plans and a new revenue generating avenue - ethanol - have been driving up the expectations. This year the production of sugar at around 19 million tonne, along with carryovers, is expected to match the growth in demand. The current price level of about Rs 17.75 per kg is fetching a handsome premium on the price level of Rs 15.50 recorded during October-November last year. According to industry sources, in next one year, the price could go beyond Rs 18 per kg. According to Mr Ritesh Nair of Anagram Stockbroking, "Sales and price growth is driven by domestic demand. Globally, tight supply of sugar and reduction of subsidies in developed countries should support the firm price trend," he added. The expansion plans of the local sugar companies and adoption of an integrated model of manufacturing are likely to sustain growth in revenue and margin in the next few years, Mr Nair observed. The industry is adding fresh crushing capacity on increasing availability of cane. There are also indications of consolidation through acquisition. The sugar production is likely to go up by 25 lakh tonnes in Uttar Pradesh alone in the next couple of years. Bajaj Hinusthan has already added fresh capacity of 7,000 tonnes crushed per day (tcd). Balrampur Chini has recently commissioned a 7,000-tcd plant. The company has also planned another unit with similar crushing capacity and a 60 kilo litre pre day distillery. Upper Ganges Sugar and Oudh Sugar are also setting up new plants with 7000 tcd capacity each. The latter is also expanding its capacity at its existing mill by 2,500 tcd. Triveni Enginnering & Inustries is raising the capacity of the old plant by 4,250 tcd and installing a greenfield 7,000 tcd mill. DCM Shriram Consolidated has just augmented capacity by 22,000 tcd.
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