Bajaj Hindusthan, Balrampur Chini, Shree Renuka, other sugar stocks jump; here is why

Sugar stocks such as Shree Renuka Sugars Ltd, Bajaj Hindusthan Sugar Ltd, Balrampur Chini Mills Ltd, Dalmia Bharat Sugar and Industries Ltd, Dhampur Sugar Mills Ltd, Avadh Sugar & Energy Ltd, Uttam Sugar Mills Ltd and Dwarikesh Sugar Industries Ltd saw a sharp uptick in Monday's afternoon trading session.

At last check, Shree Renuka Sugars was up 3.10 per cent, Bajaj Hindusthan Sugar climbed 2.46 per cent and Balrampur Chini Mills moved 1.88 per cent higher.

Dhampur Sugar Mills, Avadh Sugar & Energy, Uttam Sugar Mills, Dalmia Bharat Sugar and Dwarikesh Sugar Industries advanced between 3.86 per cent and 4.78 per cent.

The rally in sugar counters comes amid a sharp rise in global sugar prices, driven by a surge in crude oil prices following the ongoing geopolitical tensions involving the United States, Israel and Iran in West Asia.

Market expert Arun Kejriwal said the sharp rise in Brent crude prices from around $70 to $117 has made ethanol a more attractive proposition. He noted that such a move raises expectations that the Centre may consider increasing ethanol prices for FY27, which, if it happens, could benefit companies involved in ethanol blending.

Echoing a similar view, Kranthi Bathini, Equity Strategist at WealthMills Securities, said, "With rising crude oil prices, sugar stocks are currently in a much more favourable position. A majority of sugar companies with ethanol blending capacities are expected to benefit in the medium to short term, as long as crude remains at elevated levels."

On the other hand, Ravi Singh, Chief Research Officer at Mastertrust, said the recent uptick in sugar stocks appears sentiment-driven rather than backed by any meaningful fundamental improvement. Investors should approach this rally with caution. "On the domestic front, MSP-controlled pricing continues to cap revenue realisations for mills, while rising cane procurement costs are simultaneously compressing operating margins. The ethanol blending narrative, which drove a significant re-rating in sugar stocks over the past two years, is also losing momentum following recent policy target revisions, reducing earnings visibility," he added.

"Stocks such as Balrampur Chini have been witnessing buying interest from lower levels, but the broader trend remains cautious and investors should tread carefully. The current price strength lacks strong volume conviction and institutional participation. Until there is clear policy support on ethanol pricing or a meaningful reduction in global supply, sugar stocks may remain a trading sell on rallies rather than a positional buy," Singh further stated.

Meanwhile, Indian equity benchmarks were trading sharply lower on Monday, dragged by broad-based weakness across sectors amid the ongoing conflict in West Asia. Sectoral performance remained negative, with declines seen across segments. Banking, financials, automobile and energy stocks emerged among the worst performers, while the broader market also mirrored the weakness in the benchmarks.