Best Sugar Stocks in December 2024 Based on 5yr CAGR – Piccadily Agro Industries, Shree Renuka Sugars & More

India has been the largest consumer and 2nd largest producer of sugar in the world. The sugar industry is important for the livelihood of sugarcane farmers in rural regions and offers employment to around 5 lakh workers in sugar mills. In this article, find the best sugar sector stocks in India for December 2024, picked based on their 5-yr CAGR. Also, explore the advantages and disadvantages, key factors to consider when investing, and who should invest in Sugar stocks.

Best Sugar Stocks in December 2024 – Based on 5yr CAGR

Note: The best sugar stocks list provided here is as of December 4, 2024. The stocks selected have a market cap of more than ₹5,000 crore and are sorted as per their 5-yr CAGR.

Overview of the 5 Top Sugar Stocks in December 2024

1. Piccadily Agro Industries Ltd

Piccadily Agro Industries Ltd (PAIL) is an independent manufacturer and seller of malt spirits in India. The company is also engaged in the manufacturing of ethanol, Extra Neutral Alcohol (ENA), and white crystal sugar. In FY 2024, the company’s total income was ₹82,894.14 lakh, up from ₹63,634.75 lakh in FY 2023. The net profit for the year ended March 31, 2024, was ₹11,037.50 lakh, which increased from ₹2,329.57 lakh in FY 2023.

Key metrics:

• Return on Capital Employed (ROCE): 37.40%
• Return on Equity (ROE): 38.43%

2. Triveni Engineering and Industries Ltd

Triveni Engineering and Industries Ltd is one of the largest Indian integrated sugar manufacturers. In addition to its sugar operations, the company is engaged in engineering sectors, including power transmission, water and wastewater treatment solutions, and defence. In FY 2024, the company’s total income was ₹6,21,342 lakh, down from ₹6,39,051 lakh in FY 2023. The net profit for the year ended March 31, 2024, was ₹39,516 lakh, declined from ₹1,79,180 lakh in FY 2023.

Key metrics:

• ROCE: 17.59%
• ROE: 14.20%

3. Shree Renuka Sugars Ltd

Shree Renuka Sugars is amongst the largest Indian sugar and green energy producers. The company operates 8 state-of-the-art sugar mills. In FY 2024, the company’s total income was ₹1,13,674 million, which grew from ₹91,065 million in FY 2023. The profit for the year ended March 31, 2024, was -₹6,272 million, compared to a loss of ₹1,967 million in FY 2023.

Key metrics:

• ROCE: 20.97%

4. E I D-Parry (India) Ltd

E.I.D. Parry (India) Limited (E.I.D. Parry) is involved in the manufacturing of sugar in India. The company belongs to the Murugappa Group. In FY 2024, the company’s total income was ₹29,716.92 crore, which declined from ₹35,283.02 crore in FY 2023. The profit for the year ended March 31, 2024, was ₹1,617.57 crore, dropped from ₹1,827.74 crore in FY 2023.

Key metrics:

• ROCE: 20.33%
• ROE: 8.67%

5. Balrampur Chini Mills Ltd

Balrampur Chini Mills Limited (BCML) is amongst the largest integrated sugar companies in India. In FY 2024, the company’s total income was ₹5,667.74 crore, up from ₹4,728.65 crore in FY 2023. The net profit for the year ended March 31, 2024, was ₹433.20 crore, which rose from ₹275.53 crore in FY 2023.

Key metrics:

• ROCE: 20.82%
• ROE: 16.98%

Advantages of Investing in Sugar Stocks

• Steady Demand: Sugar is a staple product with consistent demand, both domestically and internationally.
• Government Support: In countries like India, the government often provides support to the sugar industry through subsidies and price controls, which can benefit investors. The central government has allocated around US$ 1.9 billion over the last five years, up until January 31, 2024, through various schemes aimed at improving the liquidity of sugar mills and helping settle cane price dues to farmers.
• Export Potential: As global demand for sugar remains high, sugar-producing companies in export-driven markets can benefit from rising export volumes. As of October 2022, India is the second-largest exporter of sugar.

Disadvantages of Investing in Sugar Stocks

• Price Volatility: Sugar prices can be volatile due to factors like weather conditions, global supply and demand, and government policies, leading to potential risks for investors.
• Regulatory Risks: The sugar industry is often heavily regulated, and changes in policy, such as export bans or price controls, can negatively affect the profitability of sugar companies.
• Environmental Concerns: The sugar industry is known for its environmental impacts, including water usage and pollution, which can result in regulatory scrutiny and increased costs.

Factors to Consider While Investing in Sugar Stocks

• Government Policies: Regulatory changes, such as export restrictions, minimum price guarantees, or subsidies, can significantly impact sugar stock performance.
• Global Sugar Prices: Sugar prices on the global market influence profitability. Understanding supply-demand dynamics and price trends can help predict potential stock movements.
• Environmental Factors: Sugar production is highly sensitive to weather conditions. A bad monsoon or drought can lead to poor harvests, affecting supply and stock prices.
• Company Fundamentals: Look for companies with strong financial health, good management practices, and sustainable production processes.
• Demand and Supply Dynamics: A growing global demand for biofuels (ethanol) and health-conscious trends affecting sugar consumption can influence stock performance.

Who Should Invest in Sugar Stocks?

Investing in sugar stocks can be appealing to both short-term and long-term investors, particularly those seeking exposure to the agricultural sector. These stocks can be attractive to investors looking for exposure to commodities, as the sugar industry can benefit from factors like government policies, weather conditions, and global demand. However, before investing in any stock it is important to understand your investment objective and risk appetite.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.