Sugarcane production in UP is higher, but a lot of cane in UP is going towards molasses (gur) and khandsari thats why sugar output is lower. But the impact on sugar mills is not much as sugar prices have bounced back after a drop in Feb.
On more fundamental level, since there are many more uses of sugar coming up like bio-chemicals, sugar stocks will give good returns over long term. With every evantuality the industry is coming up with new products. When there was sugar glut few years back, industry (with Govt support) came up with ethanol. Now with ethanol ban, they are going in for bio-chemicals – which is market driven. Thankfully companies did not put up too much ethanol capacity (max revenue for any sugar company should be 25% from ethanol) and conserved capital which will be invested in these new products or for buy back – both are good for investors.
There is no downside for the industry from here… it can go only upwards so long term investors will benefit.
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