Shree Renuka Sugars becomes the most valuable sugar co; up 326% in 3 months

Shree Renuka Sugars becomes the most valuable sugar co; up 326% in 3 months

became the most valuable sugar producing company in terms of market capitalisation (m-cap) on Thursday after its stock soared over 300 per cent during the past three months. The stock hit an over nine-year high in the intra-day session today and was trading at its highest level since February 2012.

Shree Renuka Sugars, with an m-cap of Rs 8,791 crore at 01:50 pm, surpassed Balrampur Chini Mills and EID Parry (India) that have a market cap of Rs 7,461 crore and Rs 7,390 crore, respectively, the BSE data shows.

In the past three months, has outperformed the market by zooming 326 per cent, as compared to a 72 per cent rally in Balrampur Chini Mills and 38 per cent surge in the market price of EID Parry stock. In comparison, the S&P BSE Sensex has advanced 5 per cent during the same period.

On June 26, 2021, said its board has approved capacity expansion of ethanol production after the government mandated 20 per cent ethanol blending in fuel by 2025 against a current blending of 7.79 per cent. “Considering this, the company sees a huge untapped demand for ethanol for the ethanol blending program of the government which can be of benefit to the Company in the future,” the company said on rationale behind capex plan.

“The board of directors, in their meeting held on February 9, 2021, had approved capacity expansion of ethanol production from 720 Kilo Litre per Day (KLPD) to 970 KLPD. Considering the huge untapped demand for ethanol due to the policies of government, the Board of Directors approved further capacity expansion for ethanol production from 970 KLPD to 1400 KLPD,” Shree Renuka Sugars said in an exchange filing dated June 25.

Shree Renuka Sugars Limited is one of the largest sugar manufacturers and refiners in India. As a leading agri-business and bio-energy company, it is present across sugar, ethanol, co-generation, and trading. SRSL is a subsidiary of Wilmar Sugar Holdings Pte Ltd, Singapore (subsidiary of Wilmar International Ltd, Asia’s leading agri-business Group).

While announcing March 2021 quarter (Q4FY21) results on June 25, Shree Renuka Sugars had also said the board of directors of Wilmar Sugar Holdings Pte. Ltd. have provided letter of support to the company to meet shortfall in its normal trade related working capital requirements up to the year ending March 31, 2022.

Accordingly, the company’s management believes it will be able to meet all its financial obligations on a timely basis and, hence, the company has prepared the financial results on going-concern basis, it said.

Shree Renuka Sugars becomes India’s most-valued listed sugar firm

MUMBAI: Shree Renuka Sugars has pipped Eid Parry and Balrampur Chini to become the country most-valued sugar firm, with the stock having surged nearly 300% over the last two months.

Currently, Shree Renuka’s market capitalisation stands at Rs8,375.61 crore while that of EID Parry India Ltd and Balrampur Chini is at Rs7,627 crore and Rs7,444 crore respectively.

On Wednesday, shares hit a 52-week high of Rs39.35 apiece. The scrip has surged over 295% since 27 April, and hit an upper circuit in 18 of 20 sessions.

In a recent regulatory filing, the company said its board has approved expanding ethanol production capacity by 430-kilo litre per day to 1,400-kilo litre. In February, the board had approved a capacity expansion from 720-kilo litre per day to 970-kilo litre per day.

“Considering the huge untapped demand for ethanol due to the policies of Government of India on ethanol blending, the Board of Directors of the company approved further capacity expansion for ethanol production from 970-kilo litre per day to 1,400-kilo litre per day,” the filing said.

“With considerable increase in ethanol sales and demand supply balance evening out, integrated sugar mills are expected to witness sustained increase in their cash flows going ahead,” Care Ratings said in a 8 June report.

Many sugar stocks have risen since the beginning of the year after the government brought forward the target date for achieving 20% ethanol blending with petrol by two years to 2023, to help reduce India’s dependence on oil imports.

India net imported of 185 million tonne of worth $551 billion in 2020-21. A successful 20% ethanol blending programme can save the country $4 billion per annum.

“Besides, ethanol is a less polluting fuel, and offers equivalent efficiency at lower cost than petrol. Availability of large arable land, rising production of foodgrains and sugarcane leading to surpluses, availability of technology to produce ethanol from plant-based sources, and feasibility of making vehicles compliant to ethanol blended petrol make E20 not only a national imperative, but also an important strategic requirement,” as per a government statement.

Dharani Sugars, Simbhaoli Sugar, Rana Sugars, Dalmia Bharat, Uttam Sugar Mills, KM Sugar Mills, Triveni Engineering, SBEC Sugar, Magadh Sugar, Dwarikesh Sugar, Avadh Sugar, DCM Shriram Industries, Riga Sugar have also advanced 120-378% so far this year.

Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.

This stock zoomed over 100% in a month, did you miss the rally?

Share of Shree Renuka Sugars Limited rose 5 per cent to hit a 52-week high of Rs 34.05 in early trade on BSE today.

The sugar stock has gained 113 per cent in the last one month. It opened 5 per cent higher at Rs 34.05 against the previous close of Rs 32.45 on BSE. Market cap of the firm rose to Rs 7,247.51 crore.

As per the share price history, Shree Renuka Sugars' share closed at Rs 16.03 on May 25, 2021. It hit an intraday high of Rs 34.05 in the morning session today. In a month, the stock has delivered 113 per cent returns.

The share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages. The sugar stock has gained 251 per cent in the last 12 months and risen 180 per cent since the beginning of this year.

An investment of Rs 5 lakh in the stock a year ago would have grown to Rs 17.39 lakh today.

“The minimum equality target on the upside comes to Rs 38. The stock is trading well above its 50 DEMA and 200 DEMA. The volumes have also increased with this breakout hence it’s a price volume breakout,” Jay Thakkar, VP and Head of Equity Research, Marwadi Shares and Finance Limited, told Business Today.

“The momentum indicator MACD is well into the buy mode at all the time frames i.e. from daily to monthly charts. The Crucial support on the lower side is pegged at 13 hence till it holds this level on a closing basis the medium-term outlook is positive,” he added.

Sugar stocks have been on a roll, outperforming the market this far in FY22. Recently, Prime Minister Narendra Modi said that the target date for achieving 20 per cent ethanol-blending with petrol has been advanced by five years to 2025 to cut pollution and reduce import dependence.

Ethanol extracted from sugarcane as well as damaged food grains such as wheat and broken rice and agriculture waste is less polluting and its use also provides farmers with an alternate source of income.

Speaking at the launch of the ethanol road map on the occasion of World Environment Day, Modi said that the target for mixing 20 per cent ethanol in petrol has been brought forward from 2030 to 2025.

Currently, about 8.5 per cent ethanol is mixed with petrol as against 1-1.5 per cent in 2014, he said adding ethanol procurement has risen from 38 crore litres to 320 crore litres.

The company’s largest shareholder is Wilmar International Limited, with ownership of 62%. In September 2020, the board of the Shree Renuka Sugar Limited approved allotment of 21.17 crore equity shares at Rs 8.74 per share, aggregating to Rs 185 crore on a preferential basis to promoter Wilmar Sugar Holdings.

“With ethanol blending by oil marketing companies (OMCs) picking up pace and with the Government’s stance on increasing the blending targets to 20% supported by the remunerative ethanol pricing and incentive schemes to build up capacities to achieve the same, the economics of sugar industry is getting better,” CARE Ratings said in a report.

It believes that with sugar inventories getting rationalised, demand-supply balance evening out and a considerable increase in ethanol sales, the cash flows of integrated sugar mills are going to enhance in the next three to four years.

Shree Renuka Sugars operates eleven mills globally (four in Centre-South Brazil and seven in India) with integrated ethanol and power co-generation capacity. The company also has two large port-based sugar refineries in India.