Sugar stocks, led by Bajaj Hindusthan shot up by over 6 per cent on the Bombay Stock Exchange after the government raised the price of ethanol for blending with petrol to Rs. 27 per litre today.
Shares of Bajaj Hindusthan, the country's largest sugar manufacturer, climbed 6.11 per cent to touch a month's high of Rs. 124.90 on the Bombay Stock Exchange in afternoon trade. Later, the scrip was trading at Rs. 121.85, up 3.53 per cent. Simbhaoli Sugars rose 5.40 per cent to a high of Rs. 39.95. Later the scrip was quoting at Rs. 38, up 0.26 per cent on BSE.
Ethanol is used a biofuel additive for petrol and can be made from sugarcane byproduct, molasses.
"The government's decision would help molasses producers get better price for ethanol. This has buoyed the stocks of sugar companies, which were under pressure for quite sometime," SMC Capitals Equity Head Jagannadham Thunuguntla said.
However, Shree Renuka Sugars tanked 0.15 per cent at Rs. 68.55, after hitting its months high at Rs. 71. Following the announcement, stocks of other sugar companies, including Balrampur Chini Mills also rallied (up 0.71 per cent), Dhampur Sugar Mills (3.25 per cent).
The government today approved an interim fixed price of Rs. 27 a litre for ethanol, higher from Rs. 21.5 a litre earlier.
A Group of Ministers (GoM) has recently reaffirmed Rs. 27 per litre price for ethanol to be paid by the oil marketing companies to the sugar mills.
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