Indian food is the amalgamation of ample flavours. Our dinners, festivals and ceremonial offerings are incomplete without sweets. The love for sugar is unmatchable in India and is evident by the tag of ‘largest consumer in the world’.
Moreover, sugar production in India is also reaching new heights every year. This growth seems favourable for investments in the sectors. Recently, the government has also removed the cap on ethanol production from sugar (sugar diversion).
Let’s dive deep into the intricacies of this sector and analyse these top sugar stocks list based on their market capitalisation as of September 3, 2024.
Indian sugar industry
India is blessed with a robust sugar industry. The geographical position near the equator provides abundant sunlight to the sugarcane crop. Moreover, water availability in recent years has been one of the crucial driving factors in its growth. Sugar is obtained from the crystallisation of sugarcane extract.
In India, a fraction of this sugar production is diverted towards ethanol production. This ethanol can be used as fuel in many functions. The consumption of sugar in India has experienced a constant upward trend in recent years. However, production has been affected owing to the sugar diversion policy. The abolition of this cap may improve the conditions. The sugar industry in India is expected to reach the mark of 30 million tonnes (MT) in the sugar season of FY 2024-25 (October to September).
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Here are the best sugar stocks based on market capitalisation:
(NSE: EIDPARRY, BSE: 500125)
The company has a widespread presence in the country with a considerable market in the sugar segment. The company is a part of the Murugappa group and functions through its subsidiary: Coromandel International Limited. Its production facility is broadly spread in the Southern states of the country:
- Karnataka – 3 operating units with 23,500 TCD*
- Tamil Nadu – 3 manufacturing units with 12,300 TCD
- Andhra Pradesh – 1 manufacturing unit with 5000 TCD
(*TCD – Tonnes Cane per day crushed to make sugar)
The strong market hold is reflected in the company’s equity performance. The stock is trading at ₹829.3 as of September 2, 2024. The stock has returned by nearly 26% in the past three years.
SWOT
| Strength | Weakness | Opportunity | Threat |
| The sugar segment has shown strong financial growth in Q1 FY25 despite the off-season. Moreover, its debt management over previous years is remarkable. | The net profit for FY24 has dipped compared to FY23. It has also reduced the earnings per share (EPS). | The current revenue share of sugar is 46%. The company is planning capital expenditure, along with research and development in this area, to expand its share. | No changes in the minimum selling price (MSP)of sugar were set by the government from 2019 up to FY24. So, it may affect the sales. |
Source: EID Perry (India) Ltd Annual Report, FY24
(NSE: BALRAMCHIN, BSE: 500038)
The Kolkata-based company has been a known entity in the sugar industry. Established in 1975, the company has one of the largest sugar production capacity in the country. It has ten manufacturing units across Uttar Pradesh, which contributes the most in the country.
The company has 80,000 TCD for sugar production as of FY24. Apart from current segments, the company is planning expansion into manufacturing polylactic acid.
The stock is trading at ₹591.85 as of September 2, 2024. It has provided 17% returns in the past three years.
SWOT
| Strength | Weakness | Opportunity | Threat |
| It has one of the strongest operating efficiency and net profit margins in the industry. | Declining Operating cash flow and stressed quick ratio can be a concern for the company. | The company’s project in Kumbhi has been transforming its production capacity. | The growing cost of production and raw materials may hamper the financials. |
Source: Balrampur Chini Mills Ltd Annual Report, FY24
(NSE: RENUKA, BSE: 532670)
The company was established in 1995. It is a subsidiary of Wilmar Sugar Holdings Pvt Ltd. It owns the famous brand of Madhur Sugars. It has a production capacity of 37,500 TCD as of FY24. The entity has six advanced sugar mills across the country.
The Renuka Sugars stock price is ₹49.25 as of September 2, 2024. It has provided 24% returns in the past three years.
SWOT
| Strength | Weakness | Opportunity | Threat |
| 6 regular sugar mills and 2 port-based sugar refineries provide a competitive edge to the company. | The company’s key financials and margins have been down for the past two years. | The new acquisition of Anamika Sugar Mills may provide an opportunity to tap Northern and Eastern India. | The recent removal of the cap on sugar production may provide sound competitors an opportunity. So, the company needs to improve its operations soon. |
Source: Shree Renuka Sugars Ltd Annual Report for FY24
(NSE: TRIVENI, BSE: 532356)
The company was established in 1932 and is located in the cane-rich land of Uttar Pradesh. As of FY24, it has a sugar production capacity of 63000 TCD. It has a strong customer base among multinational beverage companies and has seven sugar mills.
The share of Triveni Engineering and Industries Ltd is trading at ₹469.7 as of September 2, 2024. It has provided nearly 39% returns in the past three years.
SWOT
| Strength | Weakness | Opportunity | Threat |
| The non-sugar products contribute nearly 38% to the total revenue of the company. Providing a proper diversification. | The revenue and net profit decline for the company may hamper its growth trajectory in the future. | The company is leading in ethanol production. However, it added nearly ₹357 crore capex in FY24. | Its competitors have sound financials, which may create intense pressure on the company in the upcoming period. |
Source: Triveni Engineering And Industries Ltd Annual Report for FY24
- Bajaj Hindusthan Sugar Ltd
(NSE: BAJAJHIND, BSE: 500032)
Established in 1931, the company owns a massive operational facility of 14 sugar factories across the nation. The company earns nearly 75% of its revenue from sugar production.
The share of the company is trading at ₹41.65 as of September 2, 2024. It has provided nearly 42% returns in the past three years.
SWOT
| Strength | Weakness | Opportunity | Threat |
| Stock performance has been considerable over the past few years. | Slow growth in financials and negative margins is a big upset for potential investors. | The company has rich experience and a strong management team. So, improving financials may help in tapping bigger markets. | Promoter holding is low at nearly 24%. Moreover, it has not picked up the profit pace, like its competitors, after the pandemic. |
Source: Bajaj Hindusthan Sugar Ltd Annual Report for FY24
Financial comparison of sugar stocks in India
| Particulars | EID Parry (India) | Balrampur Chini Mills | Sh. Renuka Sugars | Triveni Engineering | Bajaj Hindustan |
| Revenue from operations | ₹2,808.6 | ₹5,593.7 | ₹11,319.0 | ₹6,151.40 | ₹6,076.56 |
| Net profit margins | 3.8% | 7.7% | (5.4%) | 2.1% | (4.2%) |
| Return on equity | 4.0% | 14.0% | (4.1%) | 14.0% | (2.0%) |
| Price to earnings ratio | 16.7 | 22.5 | – | 28.9 | – |
| Debt-to-equity | 0.36 | 0.14 | 0.03 | 0.46 | 0.84 |
| Inventory turnover ratio | 1.8 | 2.16 | 2.83 | 2.36 | 2.34 |
Also read: Sugar Stocks Surge: Impact of 2024-25 MSP Hike on Investments
Bottomline
The sugar industry in India can be a golden investment for the future. The growth of consumption and production may reflect the rise in sugar stocks in the future. These top 5 sugar sector stocks (per market capitalisation on September 2, 2024) may provide a potential investment opportunity. However, investors should analyse their investments thoroughly before making any investment decision.
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