Sugar stocks in sweet spot after cabinet nod on Rs 6,000 cr interest-free loan

Several sugar stocks notched up significant gains in noon trade, enthused over getting interest-free loan from the government. The cabinet committee on economic affairs (CCEA) yesterday approved Rs 6000 crore worth interest-free loans to the sugar industry. [caption id=“attachment_2288440” align=“alignleft” width=“380”]  Reuters[/caption] Following the announcement, sugar stocks such as Simbhaoli Sugars soared 13 percent to Rs 10.55, Shree Renuka Sugars jumped 12.25 percent to Rs 11.36, Bajaj Hindusthan Sugar surged 12 percent to Rs 14.83, Bannari Amman Sugars scaled up 7.8 percent to Rs 825, Balrampur Chini Mills shot up 7.2 percent to Rs 43.90, EID Sugar Parry India shot up 6.2 percent to Rs 160.80, Dhampur Sugar Mills rose 6 percent to Rs 31.80 and Triveni Engineering & Industries was up nearly 4 percent at Rs 18.30. In the last one months, a weak broad market sentiment and sluggish retail prices of the sweetener had weighed heavily on these stocks. Shares of DCM Shriram Industries, KCP Sugar & Industries, Oudh Sugar Mills, Rajshree Sugars, Parrys Sugar, Shree Renuka Sugars, Bajaj Hindusthan, Gayatri Sugars, Bannari Amman Sugars, Dhampur Sugar Mills and EID Parry plunged over 5-17 percent ove the past one month. Other sugar companies such as Riga Sugar, Mawana Sugars, Triveni Engineering, Dollex Industries and Dwarikesh Sugars also faltered during the period. With the domestic sugar industry facing hard times over falling prices, the Maharashtra government is also likely to offer interest-free loan to farmers for five years. The sugar industry has been under severe stress over the past year or so due to higher cost of production compared with the selling price. Selling price of sugar is currently quoted at Rs 22 per kg as against cost of production of Rs 25-28 per kg.