The Hindu Business Line : UP-based sugar stocks fall on court orders

Mumbai, Feb. 27 An interim order by the Supreme Court on Wednesday that sugar mills in Uttar Pradesh pay growers Rs 115-123 a quintal led to a fall in shares of companies based in the Northern State.

Higher exports

Shares of companies took a beating due to this. “Bajaj Hindustan Ltd was the worst hit due to the order.

The company will now have to go through a lot of financial restatements now, which will lead to major losses for the company,” said an analyst with a brokerage.

The fall in stock prices came even as sugar prices touched a 15-month high in the global market. Indian sugar is seen as holding the key to global market prices since higher exports from the country could have a cooling effect.

Stocks fall

Bajaj Hindustan slipped sharply by 8.56 per cent, touching an intra-day high of Rs 232.75 before closing the day at Rs 234.95.

Other stocks affected include Andhra Sugars down 1.30 per cent; Dhampur Sugar Kashipur fell 2.28 per cent; Dwarikesh Sugar Industries tanked 2.20 per cent and Sakthi Sugars fell 1.55 per cent.

“The markets were rather bearish on the sugar industry due to the overall demand and supply positions. But then you could see that the sentiment towards this sector was becoming positive until today when the Supreme Court announced the price hike.

"Basically, there was a certain amount of profit booking due to the decision today,” said Ms Anita Gandhi, Head-Institutional Business, Arihant Capital Markets Ltd.

Analysts also attribute the lukewarm response towards the sector to the flat market conditions. “The markets too had a certain amount of impact on the sector.

"While the announcement by the apex court affected most of the Uttar Pradesh-based millers, the other sugar stocks were rather flat due to general market sentiments,” said an analyst with a Mumbai-based brokerage.

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