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This article is more than 2 year old.

Sugar stocks gain on hopes of better Q4 earnings, rising production

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Sugar stocks have been rallying since the government hiked a minimum selling price (MSP) for sugar mills by Rs 2 per kg to Rs 31 per kg

Sugar stocks gain on hopes of better Q4 earnings, rising production
Sugar stocks have been rallying since the government hiked a minimum selling price (MSP) for sugar mills by Rs 2 per kg to Rs 31 per kg. Food Minister Ram Vilas Paswan said MSP has been increased in view of the rising sugarcane arrears to farmers.
At 1:17 PM on NSE, Avadh Sugar surged by 10 percent along with Andhra Sugars trading higher by 10 percent. Dwarikesh Sugar also rose by 9.82 percent while Dhampur Sugar advanced by 8.71 percent.
Arrears of sugarcane farmers stood at around Rs 20,000 crore as of January-end, according to industry body ISMA.
MSP is the rate below which the mills cannot sell sugar in the open market to wholesalers and bulk consumers like beverage and biscuit makers.
Another reason behind sugar stocks outperformance could be investors’ expectation of better Q4 earnings results and subsequent increased production. According to Indian Sugar Mills Association, 507 sugar mills produced 219.30 lac tons of sugar as of February 15, higher by 7.8 percent compared to last year.
The reason behind higher production this year is because Maharashtra and Karnataka sugar mills have started sugar crushing earlier this year, ISMA added.
ISMA said the sugar MSP hike is positive news for the industry as it will generate additional revenue for the sugar mills and help them in payment of cane price arrears.
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