Sugar Sector Update - Ethanol Story Intact; Sugar Prices To Move Up: ICICI Direct
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ICICI Direct Report
In our March 2021 sector report, we had reiterated our positive stance on sugar sector along with an imminent re-rating.
It is important to note that sugar stocks have seen two-four times run-up in four months while valuation multiples have been re-rated from three-five times to eight-10 times price-to-earning.
The sector has seen a turnaround from being a cyclical to a structural growth sector backed by government’s aggressive ethanol blending programme.
In the current ethanol procurement cycle, oil marketing companies would be procuring more than 300 crore litre of ethanol versus 180 crore litre last year, which is closer to ~8% blending levels.
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