 "Sugar stocks slip after UP raises crop prices")
Shares in Uttar Pradesh-based sugar companies were trading lower after the state raised the price at which sugar mills buy the new season crop by up to 16 percent to Rs 290 rupees per 100 kg.
Morgan Stanley said in a note the hike in the price of cane in the current sugar season by Rs2,920 per tonne is much higher than expectations of a Rs 2,820 pertonne hike.
[caption id=“attachment_551679” align=“alignleft” width=“380”]  Reuters[/caption]
“Profitability of north Indian millers is likely to be dented,” it added.
The hike in procurement price will increase the cost of production, which, at around Rs 35,000 per tonne, is comparable to the current spot sugar prices, implying “no profits for the sugar division at the operating level,” Morgan Stanley added.
Shares of Balrampur Chini fell 5 percent and Bajaj Hindusthan was down 1.25 percent, while Shree Renuka Sugars fell 2.1 percent
Reuters
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