Shares of sugar companies rose between 10 percent and 18 percent on Wednesday amid tensions in West Asia and the government’s E20 petrol policy, with gains in Ugar Sugar Works, Sakthi Sugars, and Balrampur Chini Mills reflecting investor expectations of higher ethanol demand.
Amid continuing tensions in West Asia and rising crude oil prices, the impact was visible across sectors in the Indian equity market. On Wednesday, sugar company stocks recorded sharp gains. Investors linked the rally to expectations of a potential increase in ethanol prices. Despite weakness in the broader market, several sugar stocks advanced between 10 percent and 18 percent, indicating investor expectations tied to the ethanol policy and potential developments in the sugarcane industry.
Ugar Sugar Works’ share rose 16 percent to ₹41.80 on the BSE. Sakthi Sugars gained around 13 percent to trade at ₹17.60. Rajshree Sugars & Chemicals and KM Sugar Mills recorded gains of about 12 percent.
Bajaj Hindusthan Sugar and Shree Renuka Sugars also rose around 10 percent. Balrampur Chini Mills advanced 9 percent to ₹500.20. Triveni Engineering & Industries recorded a gain of about 5 percent.
During the rally in sugar stocks, the broader market remained under pressure. At around 10:57 a.m., the BSE Sensex was trading 1.85 percent lower at 78,753. The movement indicated that expectations linked to the ethanol policy drew investor interest toward the sugar sector while other sectors remained under pressure.
The government has announced that E20 petrol will be sold across the country from April 1, 2026. E20 petrol will contain 20 percent ethanol and 80 percent petrol. The move is expected to increase demand for ethanol. Ethanol is primarily produced from sugarcane as well as grains such as maize and rice and is manufactured domestically. Compared with conventional petrol, ethanol burns more cleanly and is considered a more environmentally compatible alternative.
Industry participants state that ethanol prices have not increased for an extended period. According to Balrampur Chini Mills, the Fair and Remunerative Price (FRP) for sugarcane has increased by 16.4 percent and production costs have also risen. Ethanol prices have not been revised in the past three years.
The company stated that an increase in ethanol prices would not have a significant impact on oil companies. This suggests that a government decision could benefit sugar companies while fuel prices may not change significantly.
According to Elara Capital, rising sugarcane prices are putting pressure on margins for ethanol produced from sugar. The brokerage stated that if no policy action is taken, the sugar-ethanol industry could face difficulties again in the future. Despite this, Elara Capital has maintained its positive stance on Balrampur Chini Mills.
Elara Capital stated that the company’s entry into the polylactic acid (PLA) business could generate additional gains in the future. The brokerage indicated that this development presents another opportunity for investors to focus on sugar company shares over the longer term.
