Ethanol Tax Relief Boosts Sugar Stocks, Balrampur Chini, Dhampur Sugar And Dwarikesh Sugar Gain Up To 4%

Mumbai: Sugar and ethanol-related stocks witnessed strong buying interest on Thursday after the Central Government announced excise duty exemptions on higher ethanol-blended petrol variants.

The exemption applies to E22, E25, E27 and E30 fuel grades. The decision aims to encourage greater use of ethanol and support India’s biofuel programme.

The government has removed Basic Excise Duty, Special Additional Excise Duty, Road and Infrastructure Cess, and Agriculture Infrastructure and Development Cess on these fuel variants.

Move Expected To Support Ethanol Adoption

Industry experts believe the tax exemption will make high-ethanol fuel more cost-effective and attractive for oil marketing companies, fuel retailers and consumers.

Lower taxes could improve the competitiveness of ethanol-blended petrol and help increase its adoption across the country.

Market participants also expect the decision to improve demand for ethanol production in the coming years.

According to industry estimates, ethanol production facilities are operating at around 50 percent capacity. Increased demand could help improve capacity utilisation and profitability for producers.

Positive For Sugar Companies

The policy is seen as particularly beneficial for sugar companies that have invested heavily in ethanol production over the past few years.

Many sugar mills expanded their distillery capacities in line with the government’s ethanol blending targets. Higher demand for ethanol can help these companies generate additional revenue beyond their traditional sugar business.

The development is expected to improve returns on investments made in ethanol-related infrastructure and strengthen long-term earnings prospects.

Sugar Stocks Register Strong Gains

The stock market responded positively to the announcement.

Balrampur Chini's share price rose about 2.4 percent to Rs 549.5 during trading. Dhampur Sugar gained around 2.8 percent, while Dwarikesh Sugar advanced nearly 3.7 percent to Rs 45.2.

Investors viewed these companies as key beneficiaries of any future increase in ethanol demand.

Praj Industries Sees Mixed Market Reaction

Praj Industries, which provides ethanol production technology and bioenergy solutions, is also expected to benefit from higher investments in distilleries and biofuel projects.

However, despite opening higher, the stock gave up its gains and was trading around 0.2 percent lower at Rs 343 during Thursday’s session.

Analysts believe the company could still gain in the long term if ethanol-related investments accelerate across the industry.