Sugar stocks declined sharply on Monday, October 19, after the central government barred sugarcane juice and sugar syrup as feedstocks for ethanol procurement in the 2026–27 supply cycle, raising concerns over the earnings outlook for sugar mills with distillery operations.
Bajaj Hindusthan Sugar led the losses, falling 5.79%, followed by Dwarikesh Sugar Industries, which declined 5.30%, and Dalmia Bharat Sugar and Industries, down 5.27%, according to NSE data as of 9:20 am.
Shree Renuka Sugars fell 4.74%, while Avadh Sugar and Energy declined 3.17%. Balrampur Chini Mills dropped 2.79% and Mawana Sugars lost 2.45%.
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Why Are Sugar Stocks Falling Today?
The decline follows the government's decision to prohibit sugarcane juice and sugar syrup as feedstocks for ethanol procurement in the 2026–27 supply cycle, effectively reducing sugar diversion towards ethanol to zero under the policy.
The move is expected to push oil marketing companies towards alternative feedstocks, including maize, while raising concerns over the loss of an important revenue stream for sugar mills with distillery businesses.
Government measures aimed at managing domestic sugar availability and food inflation have also weighed on sentiment, including earlier duty-free raw sugar imports and restrictions on dealer stock limits.
What Experts Say
Ravi Singh, chief research officer at Master Capital Services, said the sharp decline reflects concerns over the government's decision to halt sugar-based ethanol procurement in FY27.
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“While the move may improve domestic sugar availability and support realisations, it removes an important revenue stream for mills,” Singh said.
He added that lower maize-based ethanol procurement prices could create further pressure, making the overall earnings impact negative for sugar companies in the near term.
For investors, the key concern is whether improved domestic sugar availability and potential support for realisations can offset the loss of cane-based ethanol opportunities and the resulting pressure on distillery earnings.
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