Sugar stocks rally: Shares of sugar companies rallied sharply in morning trade on Tuesday after the central government removed limits on ethanol production from sugarcane derivatives for the 2025–26 supply year.
The Ministry of Consumer Affairs, Food & Public Distribution announced that sugar mills and distilleries will now be allowed to produce ethanol from sugarcane juice, syrup, and all types of molasses without any quantitative restriction. The move marks a reversal from the curbs imposed earlier this year due to lower sugarcane availability.
The deregulation will be effective from November 1, 2025, the beginning of the new ethanol marketing year. The Department of Food and Public Distribution (DFPD) stated that it would periodically review sugar diversion to ethanol to ensure sufficient domestic sugar availability throughout the year.
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The policy shift comes amid expectations of improved sugarcane supply in the upcoming season. After two consecutive years of normal monsoon, farmers have expanded acreage under the crop, boosting projections for the new harvest.
Market reaction: Sugar stocks in demand
The policy change triggered a rally across the sugar sector:
Shree Renuka Sugars surged over 15 per cent to Rs 33
Balrampur Chini Mills rose more than 7 per cent to Rs 580
Bajaj Hindusthan Sugar climbed 12 per cent
Uttam Sugar Mills gained over 9 per cent
Dhampur Sugar Mills and Magadh Sugar & Energy added around 10 per cent each
Triveni Engineering rose 4.5 per cent
Dwarikesh Sugar and several other stocks jumped between 5 to 14 per cent
The broader sentiment was buoyed by expectations of higher ethanol blending targets and improved realisations for producers, as ethanol output becomes a more flexible revenue stream for sugar mills.
Background
Earlier this year, the government had placed restrictions on ethanol production from sugarcane juice and syrup to prioritise sugar availability, following concerns over weak cane output in several states. That policy impacted mills’ revenue diversification efforts, especially for those heavily invested in ethanol production capacity.
