CHENNAI, DECEMBER 23:  

Shares of sugar companies climbed sharply on Friday, thanks to a rebound in raw sugar prices in the global commodities market.

Parrys Sugar Industries was the biggest gainer with its shares vaulting 20 per cent, followed by Oudh Sugar Mills (12.2 per cent), Uttam Sugar Mills (11.5 per cent) Dwarikesh Sugar Industries (10.86 per cent) and Upper Ganges Sugar (9.99 per cent).

Others such as Dharani Sugar & Chemicals, Mawana Sugars, Rajshree Sugars and Simbholi Sugars also scored impressive gains.

However, Bajaj Hindusthan and Shree Renuka Sugars closed a tad lower.

Raw sugar futures on ICE edged higher on Friday in thin pre-holiday trade as the market continued to consolidate just above last week’s six-and-a-half-month low.

Pick-up in demand

Sugar prices shot up by Rs.110 a quintal at the wholesale market in the national capital on Friday following brisk buying on pick-up in demand.

Indian Sugar Mills Association has said the country’s sugar output stood at 23.4 million tonnes for the current sugar season ending September 2017, down from 25.1 million tonnes in 2015-16 and 28.3 million tonnes in 2014-15.

CARE Ratings in a September 2 report said the domestic sugar industry has started showing signs of a turnaround with surging prices and depletion in buffer stocks due to decrease in global as well as domestic production and steady growth in consumption.

“For the past two sugar seasons, the industry was witnessing a challenging phase, marked by extreme volatility in prices and lopsided margins for sugar mill owners,” rating agency CARE said. It expects stable outlook for the industry in the medium term on the back of favourable developments in sugar season 2015-16 (SS15-16), running from October 1 to September 30,” it added.

Firm trend likely

Analysts expect sugar prices are likely to remain firm over the next three to four quarters. Another positive factor, according to analysts, is that most State governments have increased cane prices only marginally. This augers well for the industry as profit outlook in the short term for mills looks bright, said an analyst at a Mumbai-based broking firm.