Sugar stocks to buy: Balrampur Chini, Dalmia Bharat, Triveni Engineering; targets

DAM Capital has reiterated a positive view on the sugar sector and named Balrampur Chini Mills Ltd, Dalmia Bharat Sugar Ltd and Triveni Engineering Ltd as its top stock picks. In a fresh note, the brokerage said domestic sugar prices have been reset at higher levels and raised its sugar realisation estimates for FY27 and FY28 to Rs47 per kg from Rs 43-44 per kg.

Sugar price movement

The brokerage said domestic sugar prices moved from Rs 38-41 per kg in June 2026 to Rs 52-55 per kg by the end of August, with an ex-factory spike to Rs 68 per kg prompting government intervention through 10 lakh tonnes of duty-free imports, a 15-day stockholding cap on bulk buyers and anti-hoarding action. It said prices have cooled since then, but have not fallen back, and that imported sugar, which lands and refines at about Rs 50 per kg, has effectively set the floor for the market.

Cheaper supplies unlikely

DAM Capital said cheaper supplies are unlikely until the 20 lakh tonnes India needs arrive, which it expects by March 2027. It said India will enter the new season on 1 October with sugar stocks of 30 lakh tonnes, enough for 35 days of consumption and the lowest in a decade. According to the note, output has fallen from 3.9 crore tonnes and 3.7 crore tonnes in SS22 (sugar season 2022) and SS23 to 3 crore tonnes and 3.1 crore tonnes in SS25 and SS26 because of repeated weather-related setbacks in Maharashtra and the weakening of Uttar Pradesh's main cane variety, CO-0238. The brokerage said the new crop will not bridge the gap, with October contributing little production and mills getting into full swing only after Diwali, and it expects SS27 production to decline further to around 2.9 crore tonnes.

In the note, DAM Capital described the situation as being "down to the last spoonful" and said El Nino had become a "two-season drag". It said deficit monsoons affect acreage, cane production, yields and crushing in the following year of an El Nino event, something seen in 2016-17, 2019-20 and 2024-25. With 2026 shaping up as a strong El Nino year, the brokerage said SS27 could face a yield-led disruption, while SS28 carries the wider risk of lower acreage and a sharper contest for cane between jaggery units and mills, favouring those with better farmer payment records.

DAM Capital also said "cane goes to the bowl, not the tank", arguing that with sugar supplies tight, the adjustment will have to come from ethanol. It expects the government to restrict ethanol production from B-heavy molasses and sugarcane juice for the season, leaving blending to be supported by maize, FCI rice and broken rice. The brokerage said the requirement of about 1,450 crore litres should be met through 1,150 crore litres of grain ethanol and 290 crore litres from C-heavy molasses. It added that Brazil offers no relief either, as it is diverting cane towards ethanol on elevated crude prices, with its blending ratio raised to 32 per cent.

Triveni Engineering

On stock recommendations, DAM Capital said every mill stands to benefit from higher sugar prices, but the main differentiator is the distillery business. It said Triveni Engineering, with a buy rating and a target price of Rs 415, screens best because it is less exposed to any closure in cane-based ethanol. More than half of its distillery capacity can switch to grain, which the brokerage said should allow ethanol volumes to rise 17 per cent to 25 crore litres in FY27 at more than 80 per cent utilisation. It said crushing has fallen 12 per cent over two seasons because of CO-0238 infestation, but more than 75 per cent of its catchment has been replanted, and it is modelling a 5 per cent rise in crushing. DAM Capital expects higher volumes and improved recovery to drive 79.5 per cent operating profit growth to Rs 730 crore in FY27.

Dalmia Bharat Sugar

Dalmia Bharat Sugar, which also received a 'Buy' rating with a target price of Rs 710, was described by the brokerage as the cleanest beneficiary. DAM Capital said the company ended June with 230 kilo tonnes of inventory carried at Rs 36.90 per kg, the lowest cost base in the industry, against a spot market above Rs 50 per kg, and said this gap should flow directly into FY27 earnings. It said the company's sector-leading recovery gives it the upper end of the Rs 6-8 per kg industry spread, while its record in import contracting should help it secure a large share of the import programme. The brokerage expects Dalmia Bharat Sugar's ethanol volumes to fall 14 per cent to 16 crore litres in FY27 before the Ramgarh dual-feed conversion lifts them back to 20 crore litres, and estimates 54.6 per cent operating profit growth to Rs 660 crore in FY27.

Balrampur Chini

For Balrampur Chini, which has received a 'Buy' rating and a target price of Rs 825, DAM Capital said it remains the purest sugar play in its coverage. The brokerage said crushing rose 5 per cent in SS26 and should increase again in SS27, with more than 90 per cent of the company's catchment replanted away from CO-0238, adding volume into a deficit market. It said distillery volumes may fall by about 25 per cent to around 20 crore litres, but added that the benefit from higher sugar prices should more than offset that decline, leading to 53.6 per cent Ebitda  growth in FY27. It also said PLA commissioning in Q3FY27 should add 23.60 per cent in FY28.