Sugarcane production has gone up in UP – due improved acreage and yield. last year planting was up 7% in UP. Overall sugar recovery has also improved by 0.5%. Dhampur bio has increased crushing caparity by 30% from 22,500 to 29,000 tpa – this will not only help it crush about 10% more cane than last year but also finish crushing earlier by March instead of April /May – this improves recovery rate in last month of crushing.
At current sugar prices mills are ok making either sugar or ethanol (in fact sugar is better) but sugarcane supply is limited and they have to optimise. Govt may not increase ethanol as prices of sugar are surely going to jump once crushing in Karnataka Maharashtra stops in Feb / March – a month earlier than last year.
Share prices will keep keep fluctuating based on news like ethanol ban, etc but Q3 results of all UP sugar mills will be very good and Q4 will be best ever. Since these companies are undervalued they are going for buyback – Balrampur, Triveni and now Dhampur Sugar. I am sure Balrampur will come with another buyback by March/ April. Dhampur Bio also should come with buyback around that time.
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