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Best Ethanol Stocks in India To Buy in 2024

Best Ethanol Stocks in India To Buy in 2024

Best Ethanol Stocks in India To Buy in 2024

Ethanol is a renewable fuel based on ethanol which is produced by fermenting sugarcane juice. Over the last few years, the government has been heavily promoting the production of ethanol by incentivizing sugar mills. As a result, the ethanol industry is thriving which makes Ethanol stocks in India a good buy in 2024.

In October 2021, the government directed Indian sugar companies to direct the excess sugarcane towards the production which can be further used to make Ethanol. This could prove to be beneficial at two levels: First, ethanol can be blended with petrol which can further be used as fuel and secondly, it will also address the excess production of sugarcane in the country.

 

 

Why Ethanol stocks are expected to rise?

Domestic biofuel like Ethanol provides a strategic opportunity to our country as they reduce the nation’s dependence on the import of fossil fuels where we don’t have to import so much of it if our domestic production goes up.  

Being a biofuel, Ethanol is an environment-friendly fuel because they have lower carbon emissions than pure fossil fuels. Therefore, bringing Ethanol into prominent use reduces the dependence on oil imports and promotes the local companies and the farming sector.

There are big environmental gains to be had from switching to Ethanol blended into petrol. Carbon monoxide emissions are seen to have dropped by 20% when using E10 or petrol with 10% blended ethanol and around 30-50% when using E20 or petrol with 20% blended ethanol.

The capacity is expected to be enhanced to 760 Cr liters from molasses and 740 Cr liters from grain for a total of 1500 Cr. by 2025. Ethanol Stocks in India the best share market tips for the investor to invest in the share market. Therefore you should invest early in the stock market to leverage the power of compounding.

 

 

Top 5 Ethanol stocks in India

 

The following are some of the top sugar companies of India which could emerge as major players in the growing space of ethanol blended eco-friendly fuel. Ethanol stocks in India are good stocks for long term investment.

Company Market Cap CMP (Rs.) Sales growth (3 yrs.) Debt/
Equity
ROCE CAGR (3year)
Shree Renuka Sugars 9,591 45 22.80% 0.00% 8.84% 85.00%
Balrampur Chini Mills: 8,160 404 -0.53% 65.00% 10.40% 47.00%
EID Parry (India) Ltd. 8,526 480 27.20% 0.27% 39.40% 30.60%
Dalmia Bharat Sugar and Industries Ltd. 2,995 370 15.50% 0.17% 12.40% 58.30%

 

 

1). Shree Renuka sugars

The company based in Maharashtra is one of the largest sugar makers in India with the brand “Madhur” which has around 32% market share in the sugar industry.

They are one of the leading producers of sugar with an integrated business model and an existing ethanol blending capacity of 920 Kilo Litre Per Day (KLPD) which they aim to take up to 1400 KLPD by 2025. They also own KBK Chemical-Engineering (100% subsidiary) which facilitates turnkey distillery, ethanol and bio-fuel plant solutions.

Company Market Cap CMP (Rs.) Sales growth (3 yrs.) Debt/
Equity
ROCE CAGR (3year)
Shree Renuka Sugars 9,591 45 22.80% 0.00% 8.84% 85.00%

 

 

2). Balrampur Chini Mills

They are one of the largest sugar makers in India which is based out of Uttar Pradesh. It has become one of the most efficient sugar producers in the country because of its strategic expansion projects and well-planned acquisition of competitors.

The sugar business makes up around 82% of the company’s revenues and mainly deals in the production of alcohol and ethanol.

Company Market Cap CMP (Rs.) Sales growth (3 yrs.) Debt/Equity ROCE CAGR (3year)
Balrampur Chini Mills: 8,160 404 -0.53% 65.00% 10.40% 47.00%

 

 

3). EID Parry (India) Limited

Founded in 1788, Parry is the oldest sugar company in India with over 225 years of operations. It is part of the Murugappa Group and has operations in Tamil Nadu, Karnataka and Andhra Pradesh.

It owns Coromandel International which is one of the leading fertilizer companies in India. The company specializes in producing critically specified sugars catering to specialized needs.

Company Market Cap CMP (Rs.) Sales growth (3 yrs.) Debt/Equity ROCE CAGR (3year)
EID Parry (India) Ltd. 8,526 480 27.20% 0.27% 39.40% 30.60%

 

 

4). Triveni Engineering and Industries Limited

It is a conglomerate operating across agriculture (sugar, alcohol and power co-generation) and engineering (water and wastewater treatment solutions, power transmission and defence) based out of Uttar Pradesh.

With a total capacity of 61,000 TCD, power co-generation of 104.5 MW, and distillery capacity of 660 KLPD distributed over seven locations in UP, the company is one of the biggest local sugar makers. It now has a 660 KLPD distillery capacity, up from a 320 KLPD capacity last year.

Company Market Cap CMP (Rs.) Sales growth (3 yrs.) Debt/Equity ROCE CAGR (3year)
Triveni Engineering and Industries Ltd. 6,466 295 8.18% 0.34% 17.50% 83.00%

 

 

5). Dalmia Bharat Sugar and Industries Limited

It is part of the Dalmia Bharat Group and is based out of Uttar Pradesh. The company mainly deals in the manufacturing of sugar and industrial alcohol and the generation of power.

It is also a preferred sugar supplier to institutional giants such as Coca-Cola, PepsiCo, Mondelez, Perfetti, Britannia and many other alcohol majors like United Breweries. The company’s sugar sales constitute 72% of the company’s total revenue.  

Company Market Cap CMP (Rs.) Sales growth(3 yrs) Debt/Equity ROCE CAGR (3year)
Dalmia Bharat Sugar and Industries Ltd. 2,995 370 15.50% 0.17% 12.40% 58.30%

 

 

Conclusion

Given the emphasis the government is putting on self-reliance and going eco-friendly, the demand of ethanol is expected to rise further in the future and the subsequent positive affect will be seen on these stocks where the upward push is given directly by the government. Moreover, seeing the overall shift towards greener resources these companies are looking like a good buy for investors in the long term.  

 

 

FAQ

 

Ques 1. Who is the biggest ethanol producer in India?

Ans.  India's largest ethanol producer is Shree Renuka Sugars Ltd., based in Mumbai, Maharashtra. It also has a distillery with a capacity of 600 liters per day. In 2019, it contributed 20% of India's sugar exports to other countries.

 

Ques 2. When should you invest in ethanol stocks?

Ans. Indian Government is focusing more on ethanol as it is a more environmentally friendly energy source than other fuels. By 2026, India is predicted to surpass the United States and Brazil as the third-largest economy for ethanol worldwide, according to the International Energy Agency. This is a good time to invest in ethanol stocks as it is in greater demand.

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