Bitter-sweet ride: 10 sugar stocks outperform Nifty with up to 77% returns, but 18 sink as much as 36%

While the sugar sector has trailed the broader market over the past year, ten stocks have still managed to outperform the Nifty’s 9% return, posting impressive double-digit gains of up to 77%. Expectations of lower sugar production supporting prices, along with the government’s emphasis on ethanol blending, present compelling reasons for investor interest but the data indicates that not all stocks in the sector justify your investment.

An analysis of 31 sugar stocks analysed by ETMarkets show only 13 stocks have managed to remain positive in the past 12 months leaving a bitter-sweet experience for the investors. The average returns of these 31 stocks stand at negative 3%, approximately.

We have considered stocks which have a share price of Rs 20 or above and barring Kesar Enterprises (m-cap of Rs 73 crore), all others have a market capitalisation of over Rs 100 crore.

Top gainers

Bannari Amman Sugars tops the chart with 77% returns and is followed by EID Parry (India) and Prudential Sugar Corporation which have delivered returns 54% and 49% returns, respectively over a 1-year period.

Balrampur Chini Mills, Indian Sucrose, Triveni Engineering & Industries, Dalmia Bharat Sugar And Industries, Ravalgaon Sugar Farm, Magadh Sugar & Energy and KCP Sugar And Industries Corporation have returned between 47% and 10%. Meanwhile Uttam Sugar Mills, Mawana Sugars and Avadh Sugar & Energy have yielded single-digit returns up to 5%.

Biggest Laggards

There are 18 laggards in the pack with the sharpest fall seen in Dhampur Bio Organics, The Ugar Sugar Works and Kesar Enterprises which have fallen by 36%, 36% and 34%.

The others including Dhampur Sugar Mills, Godavari Biorefineries, Dwarikesh Sugar Industries, Bajaj Hindusthan Sugar, Sakthi Sugars, Ponni Sugars (Erode), Piccadilly Sugar & Allied Industries, Shree Renuka Sugars, Rajshree Sugars & Chemicals, K.M. Sugar Mills, DCM Shriram Industries, SBEC Sugar, Dhampure Speciality Sugars, Zuari Industries and Sir Shadi Lal Enterprises have seen their share price erode by 34% and 1.5%.

Triggers for sugar sector

Calling the sugar sector as a cyclical sector, Kranthi Bathini, Director-Equity Strategy at WealthMills Securities said that the decision to invest in it should be based on multiple factors. One is a price sensitive sector whose prospects depend upon the production and supply, he said. Also, since it falls in the essential commodities category in India, the government cannot allow prices to keep spiralling irrespective of the demand-supply equation, Bathini said.

Moreover, Indian prices track global prices which are largely dictated by Brazil which is the world's largest sugar producer, he added.

A report by JM Financial said that India’s sugar production estimate for sowing season 2025 continues to be revised downwards by industry bodies. "The latest net sugar production estimate by National Federation of Cooperative Sugar Factories (NFCSF) stood at 25.9MMT, lower than the previous estimate and sowing season 2024. In 4QFY25, domestic sugar prices have seen a sharp uptick as sugar mills have been raising domestic prices to offset fixed costs," the brokerage had noted, highlighting that sugar prices in key states are up 6-10% QoQ.

According to the brokerage, the sugar segment profitability is likely to be robust in 4QFY25.

Not all have declared their Q4FY25 earnings. In the gainers pack, five have declared their quarterly results viz. Uttam Sugar Mills, Avadh Sugar & Energy, Magadh Sugar & Energy, Dalmia Bharat Sugar And Industries and Balrampur Chini Mills.

While Dalmia Bharat has reported a bottom line growth of 126% on a YoY basis which is highest in the pack, Balrampur Chini Mills has posted a 12% YoY uptick, lowest among its peers. The topline growth is 5% for Balrampur while 36% for Dalmia. The rest are within this range.

The top three gainers i.e. Bannari, EID Parry and Prudential are yet to announce the results.

Q4 results of laggards like Dhampur Bio Organics, Ugar Sugar and Dwarikesh Sugar Industries have also come strong. Ugar Sugar's revenue grew 30% YoY while its January-March FY25 quarter PAT surged 194% while Dwarikesh posted a 102% and 21% YoY PAT and sales growth. Meanwhile, Dhampur reported a 14% and 18% YoY uptick in PAT and revenue.

Among the underperformers who reported a weak set of numbers is Shree Renuka Sugars (Revenue down 22% and PAT down 184% YoY).

Bathini said that sugar stocks are not something which one can buy and forget but requires constant monitoring.

Others like Dhampur Sugar Mills, Godavari Biorefineries and Ponni Sugars have had a mixed quarter.

What should investors do?

Bathini said that investors should look for sugar stocks which have consistent revenue streams from multiple sources like ethanol, biofuels and liquor businesses.

JM –Given there has been no upward revision in prices for ethanol from B-heavy and juice routes, distillery margin will likely be depressed in 4QFY25.

Pranay Aggarwal, Director and CEO of Stoxkart believes that India’s sugar sector is set to grow exponentially but in his view finding winners in this space will require some deep analysis. "The government is aggressively pushing toward ethanol blending, sugar mills now have a viable, profitable alternative to raw sugar output. The sector isn’t just about producing a commodity anymore—it’s about strategy, sustainability, and smart policymaking," he said.

Share.Market expert Om Ghawalkar remains positive about sugar stocks amid government focus and push on ethanol blending through policy support.

“In the ongoing 2024-25 sugar season, India has produced 257.44 lakh tonnes of sugar. Out of this, 27 lakh tonnes have already been used for ethanol production, and another 6–7 lakh tonnes are expected to be diverted by the end of the season. Domestic availability remains stable, with a strong buffer stock of 52–53 lakh tonnes. Sugar exports are capped at 8 lakh tonnes to ensure local needs are met,” he said.

Meanwhile, on the Technically many sugar stocks are finding support near their 21-day moving average, indicating potential stability or a bounce in prices ahead, he said, recommending investors to follow a strict risk management plan while taking fresh positions.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)