i am not an expert on sugar but being cyclical a change an uptrend in the cycle will definitely give good returns.
BUT i seriously doubt that the returns will be similar to those as in previous cycle like the one in 2005-06.
The sugar cycle is not purely market based and is severely distorted by the government due to fixing of very high cane prices.
even if there is a sharp rise in sugar price, a part of the cash flow will go in paying off the debts to the farmers. At present the total debt owed by sugar industry is about 12000 Cr +
Also the govt in all likelihood will remove the export subsidy and other incentives given to sugar industry in such case.
The farmers may start demanding higher cane prices which their unions have been doing anyway.
Still since the sugar stocks are quoting at historical lows , the returns can be exciting depending on the jump in the sugar prices.
Disc : Invested in Kesar ent and Triveni eng
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