Introduction
India’s ethanol sector has gained momentum due to government initiatives and rising demand for renewable energy. Ethanol, derived from sugarcane and agricultural waste, is a key component in achieving India's energy sustainability goals. This blog highlights the top ethanol stocks based on market capitalisation, their growth potential and relevance in the evolving green energy market. To invest in these stocks, having a Demat account is essential for securely holding and trading shares.
What Are Ethanol Stocks?
Ethanol stocks represent shares of companies engaged in the production, processing and distribution of ethanol—a biofuel widely used as a cleaner alternative to fossil fuels. These companies are often part of the sugar and renewable energy sectors. To invest in such stocks, individuals can consider opening a trading account to explore opportunities in this growing market.
What Is the Future of Ethanol Stocks?
● Government Policies: India’s Ethanol Blending Program (E20 target by 2025) is driving the adoption of ethanol as a sustainable fuel.
● Rising Demand: Increased usage of ethanol in fuel blending and various industries, including pharmaceuticals, cosmetics and beverages.
● Economic Potential: A projected market value growth at a CAGR of 8.84% between 2023 and 2029 highlights lucrative opportunities, with the potential for an upcoming IPO in the sector to attract more investors.
● Environmental Sustainability: Ethanol as a renewable energy source helps reduce pollution and fossil fuel dependency.
Ethanol Industry in India
● Market Size: India’s ethanol market was valued at $6.51 billion in 2023 and is expected to reach $10.45 billion by 2029.
● Growth Drivers:
○ Government mandates for ethanol blending in fuels.
○ Reduced dependency on crude oil imports.
○ Advancements in ethanol production technologies have encouraged innovative investment options like MTF (Margin Trading Facility) to increase the buying powers.
● Key Producers: Sugar mills and distilleries utilising sugarcane, molasses and agricultural waste.
How is Ethanol Produced from Sugarcane?
The production of ethanol from sugarcane involves the following steps:
- Sugar Extraction: Sugarcane is crushed to extract juice rich in sugar.
- Fermentation: The juice is fermented with yeast to produce ethanol.
- Distillation: Ethanol is purified to achieve fuel-grade quality.
Top Ethanol Stocks in India as Per Market Capitalisation
S. No.
| Name
| P/E
| Market Cap (₹ Cr)
| NP Qtr (₹ Cr)
| Qtr Profit Var (%)
| Sales Qtr (₹ Cr)
| Qtr Sales Var (%)
| ROCE (%)
|
1
| EID Parry
| 20.71
| 15,229.05
| 591.66
| -32.42
| 9,330.35
| 2.99
| 20.29
|
2
| Balrampur Chini Mills
| 27.34
| 11,813.31
| 67.18
| -59.59
| 1,297.95
| -15.69
| 13.46
|
3
| Shree Renuka Sugar
| --
| 9,067.37
| -23.10
| 89.12
| 2,566.20
| 0.43
| 10.15
|
4
| Triveni Engineering
| 28.16
| 8,736.22
| -22.42
| -165.96
| 1,490.95
| 5.83
| 14.77
|
5
| Bannari Amman Sugars
| 33.66
| 4,396.11
| 34.27
| -29.79
| 473.73
| -21.06
| 11.82
|
The table ranks the top ethanol stocks in India by market capitalisation as of 1st December’24. It provides an overview of the leading companies in the ethanol sector, including key financial metrics such as P/E ratio, quarterly profit, profit variance, quarterly sales and return on capital employed (ROCE). These metrics give a snapshot of each company's financial performance and market dominance.
- EID Parry: Market cap of ₹15,229.05 crore, with a P/E ratio of 20.71 and quarterly sales of ₹9,330.35 crore.
- Balrampur Chini: Market cap of ₹11,813.31 crore, P/E ratio of 27.34, with a notable decrease in profit and sales.
- Shree Renuka Sugar: Market cap of ₹9,067.37 crore, with a quarterly loss of ₹23.10 crore.
- Triveni Engineering: Market cap of ₹8,736.22 crore, showing a decline in profits but growth in sales.
- Bannari Amman Sugars: Market cap of ₹4,396.11 crore, with the highest P/E ratio at 33.66, but showing a decline in quarterly sales and profits.
This data is sourced from Trendlyne and reflects the financial health and market positions of these key players in the Indian ethanol industry.
Overview of Ethanol Stocks in India
India's ethanol industry is expanding rapidly, driven by key players like Balrampur Chini Mills, Triveni Engineering and Bannari Amman Sugars. These companies are capitalising on the government's ethanol blending programme, which is boosting production alongside their traditional sugar operations. Financial metrics such as market capitalisation and P/E ratios indicate strong potential for growth in this sector. The data used for this analysis is sourced from Screener.
Overview of EID Parry
● Part of the Murugappa Group: A conglomerate with a strong presence in various sectors including agriculture, engineering and financial services.
● Diverse Business Segments:
○ Nutrient & Allied Business (67%): Fertilisers and specialty nutrients, with Coromandel International being the largest NPK player.
○ Sugar (21%): Operates six sugar plants across South India, producing pharmaceutical sugar, pure brown sugar and branded sugar.
○ Crop Protection (8%): Engaged in crop protection and bioproducts via Coromandel International.
○ Distillery (2%): Operating five distilleries with a capacity of 582 KLPD, producing ethanol and other products.
○ Co-generation (1%): Power generation capacity of 140 MW.
○ Nutraceuticals (1%): Manufacture of spirulina supplements in Tamil Nadu.
● Geographical Split (FY24):
○ Domestic: 81%
○ Exports: 19%
● Value Added Products: Selling sugar at a premium and focusing on high-value products like Amrit, Jaggery and health food items.
● Retail Expansion: Plans to reach 200,000 retail outlets in South India by 2025.
● Capex Plans: In FY24, Rs. 284 Cr was spent on various projects including expanding distillery capacity.
● Holding in Coromandel International Ltd: 56.19% equity holding valued at approximately Rs. 29,000 Cr.
● Focus on Diversification: Aiming to increase non-sugar revenues to reduce reliance on commodity sugar prices.
EID Parry Financial Snapshot
Key Metric
| Value
|
CMP (₹)
| 857.65
|
P/E Ratio
| 20.71
|
Market Cap (₹ Cr)
| 15,229.05
|
Div. Yield (%)
| 0.47
|
Quarterly Profit (₹ Cr)
| 591.66
|
Quarterly Profit Var (%)
| -32.42
|
Quarterly Sales (₹ Cr)
| 9,330.35
|
Quarterly Sales Var (%)
| 2.99
|
ROCE (%)
| 20.29
|
Geographical Split
| 81% Domestic, 19% Exports
|
Capex in FY24 (₹ Cr)
| 284
|
Holding in Coromandel (%)
| 56.19%
|
This table summarises key financial metrics and operational highlights for EID Parry, reflecting its position as a strong player in the Indian ethanol and diversified agricultural business sectors.
Overview of Balrampur Chini Mills Limited (BCML)
● Largest Integrated Sugar Company: One of India's biggest sugar producers with substantial operations in distillery and power cogeneration.
● Manufacturing Capabilities:
○ 10 manufacturing plants located in Eastern and Central Uttar Pradesh.
○ Crushing capacity of ~80,000 TCD (tons of cane per day).
○ 5 distillery units with a capacity of 1050 KLPD.
○ 10 co-generation power units with a total output of ~176 MW.
○ The commissioning of the Maizapur distillery is expected to boost operational efficiency and ROI due to its ability to use multiple resources.
● Leadership:
○ Sugar Production: Contributed approximately 3% to India's total sugar production and 9% in Uttar Pradesh in FY23.
○ Ethanol Production: Accounts for about 5% of India's ethanol production and 20% of Uttar Pradesh's production.
● Revenue Split (FY23):
○ Sugar: 78.50%
○ Distillery: 21.06% (with plans to increase distillery's share to 33% of revenue).
● Upcoming Projects:
○ Commissioning of a refinery at the Kumbhi plant to manufacture super fine sugar for exports.
○ Expanding cane crushing capacity at Kumbhi from 8000 TCD to 10,000 TCD at an investment of ₹100 crore.
● Share Buybacks (FY15–FY23):
○ Conducted six buybacks with a total payout of ₹1009.49 crore, including tax and a dividend payout of ₹360.23 crore.
Financial Snapshot of Balrampur Chini Mills
Key Metric
| Value
|
Market Share in Sugar
| 3% of India, 9% of UP
|
Ethanol Production Share
| 5% of India, 20% of UP
|
Manufacturing Plants
| 10 (located in UP)
|
Crushing Capacity
| ~80,000 TCD
|
Distillery Capacity
| 1050 KLPD
|
Co-Generation Power Output
| ~176 MW
|
Sugar Revenue Share
| 78.50%
|
Distillery Revenue Share
| 21.06%
|
Share Buybacks (FY15–FY23)
| ₹1009.49 crore (total)
|
Dividend Payout (FY15–FY23)
| ₹360.23 crore
|
Balrampur Chini Mills has been expanding its operations steadily, positioning itself as a key player in both the sugar and ethanol sectors, with a significant focus on refining and distillery expansion in line with market demand.
Overview of Shree Renuka Sugars Ltd
● Incorporation and Operations: Established in 1995, Shree Renuka Sugars Ltd. is engaged in sugar manufacturing, refining, ethanol production and power generation.
● Market Leadership:
○ One of the largest sugar refinery in India.
○ 4th largest sugar manufacturer in India.
○ Flagship brand Madhur holds ~33% share in the branded sugar market.
● Business Segments:
○ Sugar Business (92% of revenue in Q1 FY25):
■ Milling: Declined cane crushing due to adverse weather.
■ Refining: Significant growth due to higher sales volumes and realisations.
○ Distillery (4% of revenue in Q1 FY25): Produces ethanol, with focus on fuel blending.
○ Co-generation & Others (4% of revenue in Q1 FY25): Power generation using bagasse and coal.
● Geographic Split:
○ 75% exports and 25% domestic sales in FY24.
● Capacity: Operates 8 sugar mills (37,500 TCD), 2 sugar refineries (5,500 TPD), 3 distilleries (1,250 KLPD) and 259 MW power capacity.
● Expansion Plans: Doubling distillery capacity to 1,400 KLPD; acquired Anamika Sugar Mills Pvt. Ltd. in 2023.
● Debt and Funding:
○ High debt levels due to acquisitions and working capital needs.
○ Plans to raise Rs. 2,500 Cr through qualified institutional placement (QIP).
● Litigations: Facing labor disputes in Brazil with Rs. 42 Cr deposits made.
● Merger: Simplifying structure by amalgamating subsidiaries.
● Focus Areas: Refining profitability, expanding distribution and pursuing growth opportunities.
Shree Renuka Sugars Ltd Financial Snapshot
Metric
| Value
|
CMP (₹)
| 42.60
|
P/E Ratio
| -19.22
|
Market Cap (₹ Cr)
| 9,067.37
|
Dividend Yield (%)
| 0.00
|
Quarterly Profit (₹ Cr)
| -23.10
|
Quarterly Profit Var (%)
| 89.12
|
Quarterly Sales (₹ Cr)
| 2,566.20
|
Quarterly Sales Var (%)
| 0.43
|
ROCE (%)
| 10.15
|
Geographical Split
| 75% Export, 25% Domestic
|
Capex in FY24 (₹ Cr)
| 554
|
Holding in Coromandel (%)
| 0
|
Overview of Triveni Engineering and Industries Ltd
● Incorporation and Operations:
A diversified conglomerate operating in sugar, ethanol and engineering, strategically located in Uttar Pradesh's sugarcane-rich regions.
● Market Leadership:
○ Among the top 3 sugar manufacturers in India.
○ 2nd largest ethanol supplier in the country.
● Business Segments:
○ Sugar (60% of revenue in Q1 FY25):
■ Produces various grades of sugar, catering to both households and bulk consumers.
■ FY24 sugar sales declined by 16% despite price increases.
○ Distillery (31% of revenue in Q1 FY25):
■ Significant ethanol production and IMIL/IMFL manufacturing.
■ Revenue grew in FY24, though profitability was impacted by a margin shift.
○ Power Transmission (3% of revenue in Q1 FY25):
■ Expertise in high-speed gears and gearboxes, serving turbines and compressors.
■ Current order book of ~Rs. 300 Cr.
○ Water Solutions (3% of revenue in Q1 FY25):
■ Provides water and wastewater treatment on a turnkey basis.
■ Over 100 executed projects in municipal and industrial sectors.
○ Others (3% of revenue in Q1 FY25):
■ Includes FMCG products under the Shagun Sugar and Triveni Sugar brands.
● Manufacturing Capabilities:
○ Sugar: 7 plants (61,000 TCD).
○ Power: 6 plants (104.5 MW).
○ Alcohol: 5 distilleries (860 KLPD).
○ Power Transmission: Gear division manufacturing 12,000+ gearboxes annually.
○ Water Solutions: Division treating 12,000+ MLD of water.
● Capex:
○ Expanding sugar and distillery capacities.
○ Rs. 180 Cr investment to double power transmission and defense segment capacity.
● New Launch:
○ Introduced two IMFL brands, The Crafters Stamp and Matsya, in July 2024.
● Acquisition:
○ Acquired a controlling stake in Sir Shadi Lal Enterprises Ltd, adding two sugar and ethanol units in Uttar Pradesh.
● Focus Areas:
○ Sugar: Focus on premium products and crop replacement for better yields.
○ Water: Targeting a Rs. 250 Cr European project.
○ Ethanol: Aiming for 25 Cr liters production by FY26.
Triveni Engineering and Industries Financial Snapshot
Metric
| Value
|
CMP (₹)
| 399.10
|
P/E Ratio
| 28.16
|
Market Cap (₹ Cr)
| 8,736.22
|
Dividend Yield (%)
| 0.88
|
Quarterly Profit (₹ Cr)
| -22.42
|
Quarterly Profit Var (%)
| -165.96
|
Quarterly Sales (₹ Cr)
| 1,490.95
|
Quarterly Sales Var (%)
| 5.83
|
ROCE (%)
| 14.77
|
Geographical Split
| Information not available
|
Capex in FY24 (₹ Cr)
| Information not available
|
Holding in Coromandel (%)
| Information not available
|
Triveni Engineering and Industries Ltd is a leading company in India's sugar, ethanol and engineering sectors. Despite some setbacks in sugar sales, the company is focusing on expanding its capacities and emphasising premium products, ethanol and water solutions, which positions it well for future growth.
Overview of Bannari Amman Sugars Limited
● Industry: Sugar Manufacturing
● Headquarters: Tamil Nadu, India
● Key Products: Sugar, Power, Industrial Alcohol, ENA, Granite, Fertiliser, Pesticides
● Geographical Reach: Primarily domestic (79% revenue) with a 21% contribution from exports
● Key Business Segments:
○ Sugar: 84% of revenue, with an installed capacity of 23,700 TCD across five units in Tamil Nadu and Karnataka.
○ Power: 10% of revenue, with a co-generation capacity of 129.8 MW and windmills with 8.75 MW capacity.
○ Distillery: 4% of revenue, producing Industrial Alcohol and ENA, with a total capacity of 127.5 KLPD.
○ Granite: 2% of revenue, with granite processing and trading activities.
○ Trading Activities: Less than 1% of revenue, including sugar, granite, fertilisers and pesticides.
● Capacity & Expansion: The company has increased its distillery capacity from 60 KLPD to 150 KLPD and has been modernising facilities with significant capex investments.
● Mergers: The merger of Madras Sugars Limited in 2016 increased its crushing capacity to 27,300 TCD from 20,100 TCD and co-generation capacity to 129.8 MW.
Bannari Amman Sugars Financial Snapshot
Metric
| Value
|
CMP (₹)
| 3505.75
|
P/E Ratio
| 33.66
|
Market Cap (₹ Cr)
| 4396.11
|
Dividend Yield (%)
| 0.36
|
Quarterly Profit (₹ Cr)
| 34.27
|
Quarterly Profit Var (%)
| -29.79
|
Quarterly Sales (₹ Cr)
| 473.73
|
Quarterly Sales Var (%)
| -21.06
|
ROCE (%)
| 11.82
|
Geographical Split
| Domestic & Exports
|
Capex in FY24 (₹ Cr)
| ~100-120 Cr
|
Holding in Coromandel (%)
| Not Available
|
Bannari Amman Sugars, with a market cap of ₹4,396.11 crore, has faced some challenges in recent quarters, particularly with declining sales and profit growth. However, its continued focus on both domestic and export markets, along with strategic capital expenditure plans, positions the company to potentially recover and achieve future growth in the sugar and ethanol sectors.
What Factors Should One Consider Before Investing in Ethanol Sector Stocks in India?
Investing in ethanol stocks requires evaluating a variety of factors to ensure a sound decision. Below are key factors that you should consider before investing in the ethanol sector:
1. Government Policies
● Ethanol Blending Program: The government's ethanol blending targets can positively impact stocks. Ensure the company you’re eyeing is in line with blending targets.
● Incentives: Government subsidies, tax benefits and policies promoting biofuels may enhance the profitability of ethanol companies.
2. Demand for Ethanol in the Country
● Domestic Demand: The demand for ethanol blending with petrol and industrial feedstock plays a significant role.
● Export Potential: Look at the company’s export capabilities and market access to optimise revenue.
3. Weather Conditions
● Crop Yields: Ethanol production heavily relies on crops like sugarcane and maize, which are sensitive to weather conditions. Adverse weather (droughts, floods) can reduce yields and production.
4. Crude Oil Prices
● Fuel Additive Demand: Rising crude oil prices often increase the demand for ethanol as a fuel additive, which could increase stock prices.
● Volatility: Falling crude prices might reduce the demand for ethanol, potentially lowering the value of ethanol stocks.
5. Ethanol Production Capacity
● Higher Capacity: Companies with a larger production capacity can meet higher demand, boosting profitability.
● Technology & Efficiency: Efficient production methods and modern technology can help companies lower costs and increase output.
6. Exchange Rates
● Impact on Exports: Fluctuations in exchange rates can affect a company’s export revenue. A weaker domestic currency makes exports more competitive.
7. Financial Performance
● Key Metrics: Evaluate revenue growth, profit margins, cash flow, debt levels and growth ratios. Prioritise companies with strong financial statements and sustainable profits.
● Cost Evaluation: Use tools like a brokerage calculator to assess transaction costs and optimise returns.
8. Supply Chain Reliability
● Raw Material Supply: Companies with reliable and consistent access to raw materials like sugarcane and maize will have stable production capabilities.
● Infrastructure: Efficient infrastructure ensures uninterrupted manufacturing and sales, reducing operational risks.
9. Competition
● Market Share: Companies commanding a larger market share typically have better pricing power and margins.
● Auction Dynamics: Ethanol companies compete for sales through auctions with oil marketing companies. Those with better margins are likely to benefit more.
10. Entry Barriers
● Barriers to Entry: High entry barriers can reduce competition, making established companies more lucrative.
● Factors to Evaluate: Availability of raw materials, technology, capital requirements and buyer access.
11. Quality of Management
● Leadership: Strong management teams lead companies through industry challenges and take advantage of opportunities.
● Transparency: Companies with clear, transparent operations build investor trust and confidence.
12. Investor Confidence & Public Perception
● Track Record: Companies with a history of profitability and shareholder value generation are typically favoured.
● Transparency: Investor confidence is stronger in companies that provide clear communications and avoid surprises.
What Factors Influence the Performance of Ethanol Stocks?
The performance of ethanol stocks is affected by several key factors:
● Government Policies & Regulations: Favourable government policies and regulations that promote ethanol blending can boost stock performance.
● Crude Oil Prices: As ethanol is used as an alternative fuel, oil price fluctuations can directly affect its demand.
● Raw Material Availability: Ethanol production is heavily reliant on crops. Any disruptions in raw material availability can impact production and profits.
● Market Demand: The demand for ethanol-based products (fuel and industrial) has a significant effect on stock performance.
● Technology Advancements: Technological improvements that lower production costs or improve ethanol yield can increase a company's competitive edge.
How to Pick Ethanol Stocks?
1. Analyse Financial Health
● Look for companies with consistent revenue and profit growth.
● Examine debt levels to ensure the company isn’t over-leveraged.
2. Evaluate Market Position
● Choose companies with a strong market share, strategic partnerships and a competitive advantage.
3. Assess Growth Prospects
● Look at future expansion plans, particularly in ethanol capacity and market expansion.
● Review the company's efforts to diversify feedstocks or explore new applications for ethanol.
4. Regulatory Alignment
● Ensure the company’s operations are in line with current and future government policies, particularly in ethanol blending targets.
If you're interested in short-term gains, some investors might also consider intraday trading for ethanol stocks, although this requires a solid strategy and quick decision-making.
Should You Invest in Ethanol Stocks?
Investing in ethanol stocks can be profitable, but it requires careful consideration. Here's a summary:
Pros:
● Renewable Energy Focus: As the world shifts towards renewable energy, ethanol companies are poised for growth.
● Government Support: Favourable government policies can drive the growth of ethanol companies.
● Strong Demand: Increasing demand for ethanol as a fuel additive provides a steady market.
Cons:
● Weather Dependency: Ethanol production is highly dependent on agricultural conditions.
● Commodity Price Fluctuations: Crude oil price movements and crop yield variations can lead to market volatility.
● Regulatory Risks: Changes in government regulations or blending targets could affect the ethanol sector.
Benefits of Investing in Ethanol Stocks
● Growth Potential: The ethanol sector is poised for growth due to India’s increasing focus on biofuels and renewable energy.
● Government Incentives: Ethanol producers can benefit from subsidies and tax breaks.
● Diversification: Investing in ethanol stocks can diversify your portfolio with exposure to the renewable energy sector.
Who Can Invest in Ethanol Stocks?
● Long-Term Investors: Those with a longer investment horizon looking for growth in the renewable energy sector.
● Renewable Energy Enthusiasts: Individuals interested in sustainable, green energy solutions.
● Risk-Tolerant Investors: Ethanol stocks can be volatile, so investors comfortable with risk should consider this sector.
Is Investing in Ethanol Stocks Risky?
Investing in ethanol stocks involves some risk factors, such as:
● Weather-Related Risks: Adverse weather conditions can affect crop yields and production.
● Regulatory Changes: Government policies on blending targets and subsidies can impact profitability.
● Commodity Price Volatility: Fluctuations in crude oil prices can influence ethanol demand.
However, with proper research and a balanced approach, investing in ethanol stocks can offer strong returns.
Conclusion
The ethanol sector in India presents a promising investment opportunity, especially in light of the country's renewable energy ambitions. By considering key factors such as government policies, demand for ethanol, production capacity and financial health of companies, investors can make informed decisions. It's essential to stay updated on industry trends and seek professional advice before making investments.
Other Popular Stocks in India
In addition to ethanol stocks, several other popular investment options in India are gaining attention from investors. These include stocks from sectors such as technology, pharmaceuticals and renewable energy, offering diverse growth potential.
Explore ODP, MTF and Trading Account Options
For those interested in managing their investments effectively, it’s essential to have the right tools. You can open an ODP (Online Demat and Trading Platform) to manage stocks or explore MTF (Margin Trading Facility) for leveraged investments. To start your journey in the stock market, open a trading account for seamless transactions.
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