The sugar cane acreage in Maharashtra and Karnataka to expertise a greater yield this yr, boosted by an above-normal monsoon, which resulted in a 15 per cent soar in sugar output, mentioned Score company ICRA in a report.
The report additionally sees that with sugar output experiencing an uplift, it will result in revenues of sugar firms increasing by 6-8 per cent.
“ICRA tasks the gross sugar manufacturing to extend to 34.0 million MT in SY2026 from 29.6 million MT in SY2025 amidst an above-normal monsoons and anticipated enchancment in cane acreage and yield in key sugar-producing states,” mentioned Girishkumar Kadam, Senior Vice President & Group Head – Company Scores, ICRA.
Nevertheless, the report raises concern that revenue margin good points for the sugar mills are prone to stay modest if ethanol costs stay stagnant.
“Regardless of the anticipated enhance in diversion in direction of ethanol in SY2026, the closing sugar inventory stage is prone to be comfy. Additional, home sugar costs, that are presently within the vary of Rs. 39-41/kg, are anticipated to stay agency until the beginning of the following season, thereby supporting mills' profitability,” Girishkumar Kadam added. The report tasks that sugar sector is prone to stay secure, helped by the anticipated enchancment in revenues, secure profitability and cozy debt protection metrics, together with the Authorities's coverage help, together with the ethanol mixing programme (EBP).Nevertheless, ICRA emphasizes the necessity for value revisions of Ethanol to maintain distillery profitability.
“The ethanol mixing development has remained encouraging with 20% mixing goal set by the Authorities of India achieved within the latest months,” mentioned Kadam, whereas commenting on ethanol mixing and profitability associated to the phase.
“Additional, the Authorities is exploring the choice of accelerating the mixing goal past 20%, which can help the distilleries. Nevertheless, juice and B-heavy based mostly ethanol costs haven't been revised for 2 consecutive years regardless of a rise of ~11.5% in truthful and remunerative value (FRP). Therefore, revision in ethanol costs stays crucial to help the profitability of the distilleries and the sugar trade.”
