InvestorQ : Why are sugar stocks like EID Parry, Triveni and Dalmia up so sharply in the last few days? What is the story on sugar?
diksha shah made post

Why are sugar stocks like EID Parry, Triveni and Dalmia up so sharply in the last few days? What is the story on sugar?

Answer
image
ishika Banerjee answered.
4 months ago
Follow

Sugar has been sweet for quite some time and that has only got accentuated in the last few weeks. Even as the stock markets have been volatile, the one sector that sustained the uptrend was sugar stocks. The buoyancy has bene seen across the table.

Sugar stocks like EID Parry, Triveni Engineering, KCP Sugar, Uttam Sugar, Dalmia Bharat Sugar, Dwarikesh Sugar, Dhampur and Balrampur Chini have sharply appreciated 4% to 7% on Thursday. If you look at these sugar stocks over last 3 months, returns are phenomenal.

There is a fundamental story to it. Most sugar companies performed better than anticipated in the Sep-20 quarter on the back of better realisations combined with cost reduction measures. Despite sales pressures, profits have been robust in the quarter.

There was one more interesting trend in the Sep-20 quarter as far as sugar stocks are concerned. The quarter also witnessed a very smart spike in operating cash flows as well as a reduction in current debt, which resulted in lower costs for sugar companies.

Apart from better margins, the markets were buoyed after sugar companies hinted at supply cuts by 2 MT per annum for 2 years to restore demand/supply balance. A rise in ethanol prices and enhanced ethanol blending also helped ensure demand pull.

1 Views