What’s Next For Sugar And Ethanol in India? Sugar Stocks Rally On GOI’s Ethanol Blending Push

Sugar Stocks Go Sugar on Ethanol Hopes

Sugar Stock Surge: The Indian government has recently updated few things, they have increased the sweetness of ethanol blending roadmap. This has led to a sharp rise in sugar stocks in recent sessions.

Companies such as Balrampur Chini, Shree Renuka Sugars, and Dhampur Sugar lead the list of surge on the back of major announcements to encourage ethanol production.

The Supreme Court supported the implementation of 20 percent ethanol-blended petrol, which strengthened the government roadmap on clean fuels. Besides this, to market the 2025–26 marketing year, the Centre has lifted all limiting restrictions on sugarcane juice, syrup, B-heavy and C-heavy molasses in the production of ethanol.

On paper, these developments seem to be very favourable. They recommend more diversion to ethanol, even more ethanol production, and even more profit to sugar firms.

Analysts, however, warn that this rally may not be long-lived. The Indian chronic deficits in production, re-pricing of ethanol, and the increased margins of retail sales of sugar may constrain the incentive of mills to divert cane. Consequently, the early hype over ethanol might soon be seen to become sour.

Sugar Stock Surge: Production Forecasts- A Yearly Disappointment

• InCred Capital analysts warn that sugar production forecasts often disappoint.
• 2023–24:
  • Projected output: 34 MMT
  • Actual output: 29.5 MMT
• 2024–25:
  • Initial estimate: 35.5 MMT
  • Revised estimate: 28 MMT
• 2025–26:
  • Current forecast: 35.25 MMT
  • May fall short due to weak rainfall or poor recovery rates
• Stock Ratings:
  • Reduce rating: Sugar-based players like Balrampur Chini and Triveni Engineering
  • Add rating: Grain-based distilleries such as BCL Industries, Gulshan Polyols, and Globus Spirits

The Short Story Of Ethanol Blending That Is Creating BUZZ

On paper, the Indian ethanol blending roadmap can be viewed as a win: cleaner fuel, a happier environment, and sugar mills making money.

But on the ground? Not so sweet.

India has already been able to supply 7.23 billion litres of ethanol as of July 2025. Impressive! That is until you take a closer look. Only 38% came from sugar sources. The rest? The heavy lifting is being done by grains such as rice and maize that contribute 62%.

So, what’s the deal?

It turns out that sugarcane-to-ethanol conversion is not a very profitable business. At present prices, the mills will earn much more selling sugar directly than by fermenting it to ethanol. The push by the government, the policy encouragement, and even the nod of the Supreme Court to 20% ethanol-blended petrol is not going down well with mills, who are saying thanks, but no thanks.

Until ethanol prices receive a makeover, this sweet deal may continue to be met with the cold shoulder. The ethanol dream is not entirely dead but perhaps it requires some more sugar to shine.

Sugar Stock Surge Stock Performance 

So far in 2025, sugar stocks have shown mixed performance:

• Shree Renuka Sugars, Dhampur Sugar, and Dwarikesh Sugar: down up to 30%.
• Balrampur Chini and EID Parry: up as much as 22%.

What Lies Ahead for Sugar & Ethanol?

Sugar production is expected to increase, and by the end of the 2026 sugar season, 7 to 8 million metric tons of sugar could remain in storage. Because of this, analysts believe the government may allow more sugar to be exported to other countries. Although India plans to blend 20% ethanol with petrol by 2025, sugar mills will likely continue selling more sugar. This is because they earn more money from selling sugar than from producing ethanol. Therefore, for now, sugar sales will remain more popular than ethanol production.

(With Inputs)

Also Read: PIL Against 20 Per Cent Ethanol Blended Petrol Rejected By The Supreme Court