This multibagger stock hits a new 52-week high; zooms over 500% in one year 

Shares of Shree Renuka Sugars Limited jumped over 17 per cent to hit a new 52-week high of Rs 63.2 on BSE on Friday in an otherwise weak market. 

The stock has delivered multibagger returns to its shareholders in the last one year. In the past one year, the share price jumped from Rs 10 to Rs 63.20, logging around 530 per cent return in this period. 

According to Santosh Meena, Head of Research, Swastika Investmart Limited, sugar stocks are trending due to the Ethanol Blending Policy of the government, rising crude oil prices and other commodity prices have compelled the government to raise the ethanol blending target from the existing seven per cent to eight per cent to 20 per cent. 

"There is a supply dearth of ethanol in India currently, thus creating a great opportunity for sugar companies. Sugar prices have soared a lot these days; hence these two factors have changed the fortunes of Sugar companies, explaining the rise in investors’ interest in sugar stocks. There is no specific news in Shri Renuka Sugar Ltd. and company hasn’t announced anything on the stock exchanges, there is a possibility that the monumental rise this week is speculative in nature," he added. 

However, he suggested investors to stay invested in the sugar sector’s quality names like Balrampur Chini Mills Ltd, Triveni Engineering and Industries Ltd, Dhampur Sugar Mills Ltd. 

In a recent report, CareEdge Research noted that an important factor for the sugar industry in India is Ethanol Blended Petrol (EBP) program that aims to reduce the sugar glut situation in India. 

The EBP program supports the diversion of sugarcane and surplus sugar towards the manufacturing of ethanol which has now become the key focus point for the future of the sugar industry. The government also releases procurement prices for ethanol to divert sugarcane toward production of ethanol. 

"As of 31 March 2022, India on average achieved a blending percentage of 9.6 per cent since December 2021. As of 27 March 2022, 131.7 crore litres of ethanol have been supplied against the total LOI quantity of 416.3 crore litres where the contracted quantity was 402.7 crore litres. In June 2021, the government had advanced the target of achieving 20 per cent ethanol blending in petrol by 2025 from 2030 earlier," it added. 

At 14:38 hours, the shares were trading 12 per cent higher at Rs 60.60 on BSE. The market cap of the firm rose to Rs 12,898.65 crore. 

Tanya Aneja