Archive · 28 Aug 2026
India's Sugar Stocks Could Benefit as Inventories Near Nine-Year Low
India usually makes enough sugar and sometimes has extra to export.
This year, bad weather, pests and diseases damaged some sugarcane crops.
After some sugar was used to make ethanol, India may produce slightly less sugar than people consume.
Sugar stocks could therefore fall to their lowest level in about nine years.
To increase supplies, the government allowed duty-free imports of 10 lakh tonnes of raw sugar.
Higher sugar prices could help companies that still have sugar in storage.
Five profitable and relatively liquid sugar companies were screened for possible benefits.
Some of these companies are also investing in ethanol, biogas, plastics or overseas projects.
However, higher cane costs and delays in new projects could reduce the benefits.
The article says the list is for education and is not an investment recommendation.
India has permitted duty-free imports of 10 lakh tonnes of raw sugar after production fell well below initial estimates.
Net sugar output is expected at about 279 lakh tonnes against annual consumption of roughly 280 lakh tonnes.
Closing inventories could fall to around 41 lakh tonnes, the lowest level since the 2016-17 season.
The five screened companies are Uttam Sugar Mills, Balrampur Chini Mills, Triveni Engineering, Dalmia Bharat Sugar and Avadh Sugar.
Higher prices may improve realisations, but cane costs, commodity cycles and expansion risks could limit earnings gains.
- Who
- The Indian government, sugar producers and five screened companies: Uttam Sugar Mills, Balrampur Chini Mills, Triveni Engineering & Industries, Dalmia Bharat Sugar & Industries, and Avadh Sugar & Energy.
- What
- India allowed duty-free imports of 10 lakh tonnes of raw sugar as domestic production and inventories declined.
- When
- During the current sugar season, with company performance discussed through the June quarter of FY27.
- Where
- India, particularly sugar-producing states including Maharashtra, Karnataka, Gujarat and Uttar Pradesh.
- Why
- Excess rainfall, disease and pest attacks reduced cane and sugar production, while exports, ethanol diversion, stock-building and speculation tightened supplies.
Potential Benefits
Key Risks
Higher sugar prices
Potential Benefits
Falling inventories and tighter domestic supply could raise realisations for mills holding sugar stocks.
Key Risks
The supply shortage may be less severe than market speculation suggests, and higher cane costs could absorb part of the price benefit.
Business diversification
Potential Benefits
Ethanol, biogas, polylactic acid and overseas projects could reduce dependence on the sugar cycle.
Key Risks
Large projects create execution and commissioning risks, and delays could limit their contribution to earnings.
Stock valuations
Potential Benefits
Uttam Sugar Mills trades below the cited peer P/E and could gain from stronger sugar realisations.
Key Risks
Balrampur Chini Mills, Triveni Engineering, Dalmia Bharat Sugar and Avadh Sugar trade above the cited peer P/E, leaving less room for disappointment.
- Raw sugar imports
- India permitted duty-free imports of 10 lakh tonnes.
- Estimated gross production
- The estimate fell from 343.5 lakh tonnes to 309 lakh tonnes.
- Expected net production
- About 279 lakh tonnes after ethanol diversion.
- Annual consumption
- Approximately 280 lakh tonnes.
- Expected closing stocks
- Around 41 lakh tonnes, potentially the lowest since 2016-17.
- Screening criteria
- Profitable, sufficiently liquid sugar companies ranked by return on capital employed.
- Peer valuation
- The cited peer price-to-earnings ratio is 16.8 times.