In Dalal Street, Anil Kumar Goel is fondly referred to as the “sugar baron“.
His obsession with sugar stocks is such that he does not miss even a single opportunity to tuck into these stocks.
In fact, his latest portfolio reveals that he has a massive holding in most of the top sugar stocks.
Some names that readily stand out are Dhampur Sugar, Triveni, Uttam Sugar, Dwarikesh and Avadh.
|Latest Portfolio Of Anil Kumar Goel|
|Stock Name||CMP (Rs)||Nos of shares||Worth
|Dhampur Sugar Mills Ltd.||225||7,000,000||158|
|Triveni Engineering & Industries Ltd.||66||6,850,000||45|
|TCPL Packaging Ltd.||393||807,000||32|
|Sterling Tools Ltd.||275||1,010,000||28|
|Uttam Sugar Mills Ltd.||127||1,810,000||23|
|Dwarikesh Sugar Industries Ltd.||27||7,820,000||21|
|Thirumalai Chemicals Ltd.||86||2,310,000||20|
|Vardhman Holdings Ltd.||2115||90,000||19|
|Avadh Sugar & Energy Ltd.||451||400,000||18|
|I G Petrochemicals Ltd.||286||581,000||17|
|JBM Auto Ltd.||241||653,000||16|
|Vardhman Special Steels Ltd.||97||1,327,957||13|
|Cosmo Films Ltd.||195||604,000||12|
|Panama Petrochem Ltd.||125||868,500||11|
|South India Paper Mills Ltd.||83||900,000||8|
|Sarla Performance Fibers Ltd.||24||2,734,750||7|
|Sanghvi Movers Ltd.||127||454,000||6|
|Shivam Autotech Ltd.||35||1,420,000||5|
|Majestic Auto Ltd.||195||200,000||4|
|Star Paper Mills Ltd.||123||309,000||4|
|Ador Fontech Ltd.||103||265,607||3|
|Swelect Energy Systems Ltd.||245||102,000||3|
|K G Denim Ltd.||46||490,000||2|
|Amarjothi Spinning Mills Ltd.||87||220,025||2|
Master stock picker Anil Kumar Goel lapped up 55000 shares of Avadh as per the nse bulk dea disclosures. AKG has been very bullish on sugar offlate and has increased exposure in all good quality sugar stocks. Avadh still trades at a PE of 4 ? https://t.co/3bGHATY16E
— Goldie (@GoldieTuteja) February 12, 2018
Anil kumar Goel Sahab love for Chini companies… Any recent bulk deals ? Triveni broke 60 too :p @ruchi_still
— चौकीदार Fatburner (@ambeecious) March 6, 2018
Anil Kumar Goel seems to have got his call on sugar wrong: ET in 2018
We can gauge the extent of Anil Kumar Goel’s conviction in sugar stocks that he held firm to his massive consignment even though experts began to opine that he was making a colossal mistake.
“Did Anil Kumar Goel get his call wrong on sugar? His stocks have just hit 52-week lows,” Amit Mudgill of ET asked in May 2018.
Apparently, the prospects for sugar stocks turned bleak because there was a glut in production.
It is common sense that an increase in production will result in lower prices for the producers.
Also, there was news that the GST Council would impose a cess on sugar which would further torpedo the profitability of sugar companies.
— ETMarkets (@ETMarkets) May 2, 2018
Anil Kumar Goel reaps golden harvest from sugar stocks: ET in 2019
Fortunes in Dalal Street change overnight.
In April 2019, experts were singing a different tune and lauding Anil Kumar Goel’s sagacity in buying sugar stocks when the chips were down.
“Value investor Anil Kumar Goel’s love for sugar stocks is by now well-known on Dalal Street. He went on a buying spree on this counter through all of last year much to the amazement of investors and traders …. Goel has just reaped a golden harvest,” Rahul Oberoi of ET noted.
Ambareesh Baliga pointed out that there was a slump in production of sugar in Brazil which had sent sugar prices surging.
He also explained that the change in ethanol production policy has given the power of choice to the sugar mills to regulate their sugar inventory.
#SUGAR stocks at Year Highs.
Anil Goel is the big winner.
Contra Accumulation over the last 2 Yrs in multiple Sugar Stocks.
Followed through on falls in last 6M.#PATIENCE and #CONVICTION pic.twitter.com/c8NPHgM8Xw
— prastham (@prastham) April 25, 2019
Rs 150 crore bonanza in 4 months
Presently, the position is that Anil Kumar Goel is sitting on massive gains of Rs. 150 crore.
According to data meticulously collated by Rahul Oberoi of ET, Anil Kumar Goel increased his holdings in Avadh Sugar & Energy, Triveni Engineering & Industries and Uttam Sugar Mills in March quarter.
These stocks surged up to 42 per cent on a year-to-date basis.
KRBL, which is the crown jewel in the portfolio, delivered a massive gain of 24 per cent in just four months.
The result is that the net worth of Anil Kumar Goel’s portfolio has increased by Rs. 150 crore to nearly Rs 970 crore from Rs 815 crore.
Should we also dive into sugar stocks? Experts are divided on the issue
Now, the million dollar question is whether we should also follow Anil Kumar Goel’s illustrious footsteps and dive into sugar and ethanol stocks.
Manish Bhandari of Vallum Capital is very gung ho about the sector.
In his latest newsletter, he has revealed that he has bought stock in a company which is “market leader of sugar and ethanol manufacturing in India”.
He has pointed out that the company is debt free and is likely to achieve earnings of more than Rs 600-700 crs despite the depressed sugar price cycle.
The Company is said to be available at a market cap of Rs 3,000 crore, which appears to be dirt cheap, given the earnings of Rs 600-700 crs.
Though the Company is not named, my guess is that the reference is to Balrampur Chini Mills.
The stock has already delivered gains of 100% on a YoY basis.
Varinder Bansal is also known to be aggressively bullish about sugar and ethanol stocks.
He appears to have raked in massive gains from sugar stocks and constantly keeps referring to nuances of the sector.
Market finally recognizing the sector where we have very bullish since last 6-8 months 🙂 https://t.co/mCVGoxE7pq
— Varinder Bansal (@varinder_bansal) February 25, 2019
A lot of people laughed at us….mocked at us….but we just kept on reading & learning + doing ground research & finally feel v satisfied.. #ETHANOLtheme
— Varinder Bansal (@varinder_bansal) February 13, 2019
Some news on the sugar sector: IMP for the sector
Negative if these are implemented
Likely draft report on power tariff revision & reversal of interest waiver by the UP governmenthttps://t.co/0QhfIVyEOB
— Varinder Bansal ?? (@varinder_bansal) April 8, 2019
Indian Sugar Sector: Government Measures to Structurally
Change the Dynamics ??? pic.twitter.com/nGkPNUF6WK
— Varinder Bansal ?? (@varinder_bansal) April 3, 2019
1st report of the new #Brazil #sugar season is out. Very slow start to the crop: 52 pct less sugar, 37 pct smaller #cane crush. Mills used only 23 pct of cane to sugar production, the rest going to #ethanol making #biofuels #renewable #corn pic.twitter.com/AkJI0r3ZmN
— Marcelo Teixeira (@tx_marcelo) April 25, 2019
However, G Chokkalingam, the veteran investor, is diffident about the future prospects of the sugar sector.
“Oversupply condition in sugar in the domestic market is not yet over. There have been margin pressure on sugar companies and, hence, on working capital, which is evident from mounting arrears to farmers. The rally in sugar stocks will fizzle out after March quarter earnings,” he opined.
He advised investors to remain cautious on this counter.
This caution was reiterated by Amar Ambani of Yes Securities.
He pointed out that the October 2019 opening sugar inventory was very high at 13 million tonnes, which is 50 per cent of domestic consumption.
“Unless the output falls by 35 per cent next year, of which there is no visibility, we remain bearish on these stocks,” he warned.
There is also a report in Reuters which states that India’s sugar production could rise 1.5 percent in 2018/19 to a record 33 million tonnes, increasing inventories in the world’s second-biggest producer and putting pressure on local prices.
— Reuters India (@ReutersIndia) May 3, 2019
Prima facie, it appears that there are too many imponderables effecting the prospects of the sugar sector. Obviously, novices of our caliber cannot be expected to come to grips with these imponderables. Also, in the light of the difference of opinion amongst the experts, it is advisable that we take measured steps while buying these stocks and not dive in head first!