The Indian Ethanol Stocks Industry: A Synopsis
In June 2022, India reached a significant milestone by achieving an average blending rate of 10% ethanol in petrol. The government has fast-tracked efforts to reach a 20% average blending rate by 2025.
This initiative, known as the Ethanol Blended with Petrol (EBP) program, has spurred massive ethanol production in the country, benefiting the companies involved. As of 2023, India’s ethanol production capacity stood at approximately 1,380 crore liters, with 875 crore liters from molasses and 505 crore liters from grains.
To meet the 20% blending target by 2025, India must ramp up production capacity to over 1,700 crore liters. Sugar mills have benefitted significantly from selling ethanol to oil marketing companies for blending, generating over Rs 94,000 crores in the last decade and adding to the bottom line.
With supportive government policies and rising demand for ethanol, sugar mills are expected to reap substantial financial gains in the foreseeable future.
Some Ethanol Stocks in India
- EID Parry (India) Limited
- Shree Renuka Sugars Limited
- Balrampur Chini Mills Limited
- Triveni Engineering and Industries Limited
- Bajaj Hindusthan Sugar Limited
Top Listed Ethanol Stocks List in India: An Overview
EID Parry (India) Limited
EID Parry is a leading sugar manufacturer based in Chennai and part of Murugappa Group. Founded in 1788, the company has six sugar manufacturing plants and one distillery across South India. The company produced 647.28 liters of ethanol in FY23 and 638 liters in H1FY24.
| Market Cap | CMP (as of 4th Feb 2024) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹ 11,390 crore | ₹641.60 | ₹670 | 11.5 | 27% | 8% |
In FY23, the company’s total income was reported at ₹35,283.02 crores, up by about 50% from ₹23,743,78 crores in FY22. The consolidated EBITDA during FY23 was ₹3,194.72 crores. While profit after tax in FY23 was ₹1,827.74 crores, compared to ₹1,573.70 crores in FY22.
Shree Renuka Sugars Limited
Shree Renuka is India’s largest agribusiness and bio-energy corporation. It is one of the first companies to harness the potential of sugar as a source of green energy in India. The company operates eight sugar mills with a cumulative refining capacity of 1.7 MTPA and three distilleries with an ethanol production capacity of 1,250 KLPD.
| Market Cap | CMP (as of 4th Feb 2024) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹10,579 crore | ₹49.7 | ₹123.50 | – | 38% | – |
In FY23, the company’s total income was reported at ₹9,106.5 crores, up by about 40% from ₹6,501.6 crores in FY22. EBITDA during FY23 was ₹719.7 crores. The company reported a loss of ₹196.66 crores in FY23, which increased from ₹136.7 crores in FY22.
Balrampur Chini Mills Limited
Founded in 1975, Balrampur Chini Mills is one of India’s largest sugar manufacturing companies, with a distillery capacity of 1,050 KLPD.
| Market Cap | CMP (as of 4th Feb2024) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹7,931 crore | ₹393.10 | ₹525.90 | 14.7 | 29% |
In FY23, the company’s total income was reported at ₹4,728.65 crores, down by about 4% from ₹4,893.94 crores in FY22. EBITDA in FY23 was ₹512.32 crores. And, in FY23, profit for the year was ₹275.53 crores, down from ₹514.66 crores in FY22.
Triveni Engineering and Industries Limited
Founded in 1932, Triveni Engineers is one of India’s largest integrated sugar manufacturers and producers of fuel and alcohol-grade ethanol. The company has a cumulative ethanol production capacity of 660 KLPD.
| Market Cap | CMP (as of 4th Feb 2024) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹7,397 crore | ₹338 | ₹417 | 17.4 | 49% | 55% |
In FY23, revenue from operations was at ₹6,310.1 crores, up 25.6% from ₹4,694 crores in FY22. EBITDA in FY23 was ₹696.3 crores. And, net profit during FY23 was reported at ₹1,791.8 crores, up from ₹424.1 crores.
Bannari Amman Sugars Limited
Bannari Amman Sugars Limited is a Tamil Nadu-based industrial conglomerate involved in the manufacturing and trading sugars, alcohol, liquor, granite, etc.
| Market Cap | CMP (as of 4th Feb 2024) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹3,020 crore | ₹2,408.40 | ₹2,975 | 19.7 | 10% | 12.38% |
In FY23, the company’s total income was reported at ₹2,565 crores, up by about 26% from ₹2,004 crores in FY22. Profit for the period in FY23 was ₹143.4 crores, up from ₹80 crores in FY22.
Factors to Consider Before Investing in Top Ethanol Stocks in India
Investing in ethanol stocks in India is not without risks. There are several factors to consider before investing in top ethanol stocks in India.
Dependency on the Sugar Industry
Ethanol production is closely tied to sugar production in India, which relies heavily on water availability due to the water-intensive nature of sugarcane cultivation. Therefore, any rainfall deficit year can severely impact the sugarcane production in the country, indirectly impacting ethanol production. This adds to volatility and uncertainty in the performance of ethanol stocks.
Government Policies
Government policies play a crucial role in the ethanol industry as they set the blending targets and procurement prices by oil marketing companies and provide financial incentives for ethanol producers. For example, advancing the 20% blending target to 2025 from the previously slated 2030 has boosted the demand and profitability aspect for ethanol producers. Similarly, any policy shift can significantly impact the performance of ethanol stocks.
Rising Demand
Ethanol is an important industrial chemical and solvent used as a blending fuel for automotive fuel. It is also the primary ingredient in many alcoholic beverages. Therefore, before investing in ethanol stocks, you should assess the company’s product portfolio and the different segments of the market they cater to. You should also evaluate the demand and supply scenario for ethanol in India and globally.
Protection from Inflation
Ethanol is derived from sugarcane and food grains, commodities that often see their prices rise alongside inflation. With the government regularly adjusting procurement prices in line with production costs, investing in ethanol stocks can offer a hedge against inflation for investors.
Financial Health of Companies
Ethanol production is a capital-intensive business that requires setting up distilleries and an effective supply chain to ensure adequate sugarcane supply and working capital. Therefore, before investing in ethanol stocks, you should look for indicators like revenue growth, profitability margins, cash flow, debt-to-equity ratio, debtor payable days, return on equity, and return on capital employed. You should also compare the financial results with different ethanol companies.
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I’m Archana R. Chettiar, an experienced content creator with
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