MUMBAI – While the broader Indian stock market faced a sharp sell-off on Monday, sugar companies emerged as a rare bright spot. Shares of major producers, including Dalmia Bharat Sugar, Dwarikesh Sugar, and Shree Renuka Sugars, jumped between 2% and 12%, significantly outperforming the rest of the market.
The rally is being driven by a combination of rising global energy costs and a shift in how sugar companies generate profit.
The Ethanol Connection
The primary driver behind the surge is the spike in crude oil prices. Brent crude rose to $116.5 per barrel following an escalation in the Middle East conflict and the deployment of U.S. troops to the region.
Higher oil prices make ethanol—a biofuel made from sugarcane—much more attractive as an alternative to petrol. Because many Indian sugar mills have diversified into ethanol production, they can now shift more of their sugarcane crop toward fuel rather than food. This flexibility allows them to maintain high profit margins even when the global economy is volatile.
Global Supply Shortage
Adding to the momentum is news from Brazil, the world’s largest sugar producer. Production there is expected to drop to 40.3 million tonnes in the coming season, down from over 43 million tonnes last year.
This predicted shortage in global supply is expected to push international sugar prices higher. Indian exporters stand to benefit significantly from this gap, especially as a weaker rupee makes Indian sugar more competitive and profitable on the global stage.
Market Standouts
Individual stocks saw impressive gains during Monday’s session:
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Dalmia Bharat Sugar: Up over 12%
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Dwarikesh Sugar: Up over 10%
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Shree Renuka Sugars: Gained up to 11%
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Bajaj Hindusthan Sugar: Also saw double-digit growth
As energy security becomes a top priority amid regional conflicts, investors are increasingly betting on sugar stocks as a strategic hedge against rising fuel prices.
