Investment in Stock Market in Sugar Sector with CA Rakesh Singhal

Investment in Stock Market in Sugar Sector with CA Rakesh Singhal

On 9th September, 2019 International Sugar Price were around 61.

On 17th February, 2020 Sugar Price are around 80.
So you can see that in Last 6 Months the prices are increased by 33% in International Markets.
India is the largest consumer and the second largest producer of sugar, topped by Brazil. It is the second largest agro-based processing industry of the country, topped by cotton textile industry.
Sugar sector is a cyclical sector and periodically there is a cycle of ups and down in the prices, we can say it commodity cycle.

India :

In India, sugar production follows a three-five year cycle. Higher production leads to increased availability of sugar thereby declining the sugar prices. This leads to lower profitability for the companies and delayed payment to the farmers. As a result of higher sugarcane arrears, the farmers switch to other crops thereby leading to a fall in the area under cultivation for sugar. This then leads to lower production and lower sugar availability, followed by higher sugar prices, higher profitability and lower arrears and thus the cycle continues.

The production of sugar is seasonal. Sugarcane is crushed from October to March.

Sugar production in India declines by 22.7% during October 2019-mid February 2020

According to the Indian Sugar Mills Association (ISMA), India’s sugar output fell by 22.7% to 17 million tonnes during the period October 2019-mid February 2020 led by a sharp 47.7% fall in Maharshtra’s sugar production to 4.3 million tonnes.


Main Producer of Sugarcane UP, Maharashtra, Karnataka, Tamilnadu, Andhra Pradesh and other are Gujarat, Punjab, Bihar.

• Companies and Business:


• Main Points to considering a Company for Investment in Sugar Sector:

Revenue Break up
Valuation
Management

• Companies
EID-Parry India
Balrampur Chini


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