Best Ethanol Stocks For Feb 2025 Based on 5Y CAGR: Shree Renuka, EID Parry and More

Ethanol, a key biofuel, is primarily produced through the fermentation of sugars by yeast or through petrochemical processes like ethylene hydration. Beyond serving as an alternative fuel, it is extensively used in industries as a solvent and in the creation of organic compounds. Ethanol also plays an important role in medicine as an antiseptic and disinfectant. In India, significant progress is being made in securing a sustainable energy future by integrating practices like ethanol blending. In this blog, let us look at the best ethanol stocks for February 2025:

Ethanol Industry in India: An Overview

As India’s energy demand continues to rise due to factors like economic growth, population increase, urbanization, and changing lifestyles, ethanol plays a vital role in addressing this need. By March 2024, fossil fuels accounted for nearly 98% of the fuel used in the road transportation sector, while biofuels like ethanol made up only 2%. This heavy reliance on fossil fuels poses challenges for energy security, foreign currency outflow, and environmental sustainability.

As of April 2024, India’s industrial ethanol production capacity reached 13.80 billion litres, with 8.75 billion litres coming from molasses and 5.05 billion litres from grain-based feedstocks. The Indian government has made significant progress, achieving a 12% ethanol blending rate in FY 2024 to meet its target of 20% by 2025.

Best Ethanol Stocks in Feb 2025 Based on 5-Year CAGR

Note: The above ethanol stocks have been selected and sorted based on 5Y-CAGR and market capitalisation of a minimum ₹3,000 Crore as of January 24, 2024.

Overview of Best Ethanol Stocks

Piccadily Agro Industries Ltd

Piccadilly Agro Industries Ltd (PAIL) is engaged in the manufacturing of sugar and distillery products at its facility in Haryana. As of November 2024, the company boasts an ethanol production capacity of 78 KLPD. During Q2FY25, it raised capital aggregating ₹262 Crore through preferential allotment, which is being utilised for ongoing expansions

Key Metrics

• ROE: 30.6%
• ROCE: 29.6%

Triveni Engineering and Industries Limited

As a prominent player in the Indian market, Triveni Engineering and Industries Ltd excels in sugar and ethanol production. In Q2 FY25 and H1 FY25, ethanol represented 93% and 92% of total alcohol sales, compared to 94% and 93% in the corresponding periods of the previous year. During Q2FY25, the sales volume of low-margin ethanol produced from maize operations increased substantially.

Key Metrics

• ROE: 14.2%
• ROCE: 14.8%

Shree Renuka Sugars

Shree Renuka Sugars Ltd is a producer of refined sugar, ethanol, and ethyl alcohol, with a focus on electricity generation and distribution. The recent easing of the ban on ethanol production from CJ and BH molasses presents positive outlooks for the upcoming season.

Key Metrics

• ROE: –
• ROCE: 10.2%

EID Parry (India) Ltd

EID Parry operates in the sectors of sugar, nutraceuticals, and ethanol production. In Q2 FY25, EID Parry sold approximately 419 lakh litres, compared to 304 lakh litres in the previous year, with ENA sales at 159 lakh litres and ethanol sales reaching around 260 lakh litres.

Key Metrics

• ROE: 13.5%
• ROCE: 20.3%

Best Ethanol Stocks in Feb 2025 Based on Net Margin

Best Ethanol Stocks in Feb 2025 Based on Debt to Equity Ratio

Factors to Consider Before Investing in Ethanol Sector Stocks in India

Investing in the ethanol sector in India can be promising, but it comes with specific risks and considerations. Here are some key factors to consider before making investment decisions in ethanol sector stocks.

• Blending Targets and Demand Growth: The Indian government has set an ambitious ethanol blending target, which significantly impacts the demand for ethanol in the transport sector. A rising demand for ethanol as an alternative fuel due to these targets can drive growth in the sector
• Raw Material Availability: Ethanol production in India is primarily based on crops like sugarcane, corn, and maize. The availability and cost of these raw materials can fluctuate due to weather conditions, agricultural yields, and global commodity prices. Investors should monitor agricultural trends closely.
• Competition and Market Dynamics: The ethanol market is competitive, with several players involved in both production and blending. Understanding the competitive landscape and evaluating the market share of potential companies is important for identifying strong investment candidates.
• Domestic Ethanol Demand: Analysing domestic ethanol demand and the potential for exports is vital, as these factors significantly influence the industry’s growth trajectory.

Should You Invest in Ethanol Stocks?

Investing in ethanol stocks demands careful analysis due to several potential risks, including fluctuations in commodity prices, changes in regulations, and competition from other energy alternatives. Although the sector shows strong growth potential, stock performance can be impacted by factors such as policy adjustments, market dynamics, and advancements in technology.

Conclusion

Ethanol, known for its versatility as a key fuel, has considerable potential to make a positive impact. Widespread adoption of ethanol could lead to substantial savings on oil imports and help safeguard the environment. Before investing in leading ethanol stocks in India, it is essential to consider the various factors that impact the market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities market are subject to market risks, read all the related documents carefully before investing.