Best Ethanol Stocks in India 2024

22 March 2024
9 min read
Best Ethanol Stocks in India 2024
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(The stocks mentioned in the blog are as per Analyst Ratings and Market Capitalization)

The ethanol sector in India is a crucial player in the country's energy market that drives both economic growth and environmental sustainability. With increasing focus on renewable energy sources and reduced dependency on fossil fuels, ethanol stocks are gaining popularity among investors who seek opportunities in the green energy market.

In this blog,  you will explore some of the top ethanol stocks in India, which are gaining popularity among today's investors.

Ethanol Industry in India - A Brief Overview

Ethanol has been used as a fuel since the early 1900s to improve fuel quality and reduce pollution. In the 1970s, India began making ethanol from sugarcane mainly for industries. During the early 2000s, the Indian government found ethanol could be used as a renewable fuel, and since then, India's ethanol production and use have been increasing steadily. Ethanol usage in India is set to rise due to increased demand for biofuel, alcoholic beverages, and high production levels. 

According to a report, the period between 2023 and 2029 predicts significant growth in India's ethanol market, reaching a value of USD 4.15 billion with a CAGR of 9.16%. While challenges such as the COVID-19 pandemic significantly affected fuel demand, the high demand for ethanol-based products like hand sanitisers helped mitigate some of the losses.

Various factors, such as the country's shift towards ethanol-based fuels, expansion in the agricultural sector for ethanol production, and government investments, are driving this projected growth. 

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Best Ethanol Stocks in India 2024 As Per Analyst Ratings

The following table highlights the list of best ethanol shares in India 2024 as per analyst ratings. The list is based on stock ratings provided by analysts who rate a stock after a detailed study of the market-

S.No.

Best Ethanol Stocks in India (as per analyst ratings)

BUY Analyst Rating (in %)

1.

Dwarikesh Sugar Industries

80

2.

Triveni Engg

60

3.

Balrampur Chini Mills Limited

71

*Our stock selection criteria for top stocks based on analyst ratings are mentioned at the bottom of this blog.

Top Ethanol Stocks in India in 2024 As Per Market Capitalisation

The following table gives a list of the best ethanol company stocks in India based on their market capitalisation: 

S.No.

Best Ethanol Sector Stocks in India (as per Market Capitalisation)

1.

EID-Parry (India)

2.

Shree Renuka Sugars

3.

Balrampur Chini Mills Limited

4.

Triveni Engg

5.

Bajaj Hindusthan Sugar  

*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog.

Overview of Best Ethanol Stocks in India 

Here is a brief overview of the top ethanol shares in India as per the analyst ratings and market capitalisation outlined above. 

  • Dwarikesh Sugar Industries

Incorporated in the year 1993, Dwarikesh Sugar Industries Limited is a diverse industrial company based in India. It focuses on producing sugar, ethanol, power, sanitiser, bagasse, fertilisers,  pesticides, molasses, and many other products. 

Dwarikesh Sugar works with around 1.54 lakh farmers who cultivate sugarcane across three locations spanning more than 1.17 lakh hectares. Its sugarcane procurement amounts to approximately 382 lakh quintals. With primary manufacturing units located in Uttar Pradesh at Bundki village, Bahadurpur village in Dhampur Tehsil, and Faridpur Tehsil in Bareilly District, it also operates in other parts of India such as Maharashtra, Delhi, and Rajasthan.

  • Triveni Engg

Triveni Engg, founded in 1932, is one of India’s largest sugar manufacturing companies. It also operates in engineering businesses, including power transmission, water and wastewater treatment solutions, and defence sectors. The company manufactures white crystal sugar across 7 plants in Uttar Pradesh. 

Utilising molasses from sugar production, it produces ethanol and extra-neutral alcohol. According to the news, the company plans to divert 4.5 million tonnes of sugar towards the ethanol program, which amounts to almost 12% of its total sugar production. It also aims to increase its ethanol capacity from 660 kiloliters per day to 1,100 kiloliters per day.

Ethanol Stocks Fun Fact - Groww

  • Balrampur Chini Mills Limited

Headquartered in West Bengal and established in 1975, Balrampur Chini Mills Limited is an Indian company that produces and distributes sugar, alcohol, ethanol, molasses, bagasse, and organic manure. The company operates power plants during sugar production to fulfil its power needs and sells any excess bagasse in the market. 

Its capacity for crushing sugarcane is 80,000 tonnes daily, with a distillery capacity of 1,050 kilolitres per day and a saleable co-generation capacity of 175.7 megawatts. The company operates 24 facilities across 10 locations. Moreover, it uses composting technology to create bio-composts under various brands like Paudh-Sakti, Jaiv-Shakti and Devdoot. 

  • EID-Parry (India)

EID-Parry (India) Limited is an Indian manufacturing company that produces sugars, sanitisers, super grains and nutraceuticals. Based in Chennai, it is part of the ₹570 billion Murugappa Group. The company is renowned for establishing India's first sugar plant in 1842. It operates 6 sugar plants and one standalone distillery across South India, with cutting-edge facilities for sugar crushing, co-generation and distillation. 

Additionally, EID Parry leads globally in organic spirulina and microalgal products. Its nutraceuticals business includes major international certifications and manufacturing plants in Tamil Nadu. The company also has subsidiaries involved in refined sugar and farm inputs.

  • Shree Renuka Sugars

Shree Renuka Sugars is one of the biggest ethanol producers and sugar refiners in India. The company's green energy business includes producing ethanol for blending into petrol and generating electricity. They are among the major contributors to the Indian government's Ethanol Blending Program. The company runs 8 modern sugar mills, some of which produce ethanol. 

Recently, their ethanol production capacity has increased to 1,250 kilolitres per day, aiming to increase their contribution even further. They employ innovative techniques to produce more than their usual capacity, which enhances the country's energy security.

  1. Bajaj Hindusthan Sugar  

Bajaj Hindusthan Sugar Limited (BHSL) is one of the top sugar and ethanol manufacturers in India. Based in Maharashtra, it runs 14 sugar plants in Gola Gokaran Nath, Thana Bhawan, Budhana, Palia Kalan, Khambharkhera, and others. These plants have a combined capacity to crush 136,000 tonnes of sugarcane per day and distil 800 kilolitres of alcohol daily.

The company is a major ethanol producer, making 38 million litres annually, with plans to increase production to around 218 million litres every year. Additionally, Bajaj Hindusthan Sugar generates about 430 megawatts of power from bagasse at its sugar mills. It also operates 5 coal-fired power plants, generating an extra 450 megawatts for the state grid.

Factors to Consider Before Investing in Ethanol Sector Stocks in India

While you might find ethanol stocks appealing for investment, it is in your best interest to consider the influencing factors before making a decision. Thus, let’s now explore some critical factors here-

  • Government Policies

The Indian Government may offer subsidies and tax incentives to ethanol producers, influencing stock prices positively. Policies like the National Biofuel Policy and the Ethanol Blending Program promote biofuel usage, encouraging investment in ethanol companies.

  • Weather Conditions

Ethanol production relies on crops like corn and sugarcane, which are sensitive to weather. Droughts, floods and other extreme weather events can reduce crop yields, affecting ethanol production and stock prices negatively.

  • Crude Oil Prices

Ethanol is often used as a substitute for gasoline. When crude oil prices rise, ethanol becomes more attractive, potentially increasing stock prices. Conversely, falling crude oil prices can lead to decreased demand for ethanol and lower stock prices.

  • Ethanol Production Capacity

The production capacity of ethanol companies is crucial. Higher production capacity allows companies to meet demand effectively, potentially boosting stock prices.

  • Exchange Rates

Ethanol producers may export their products, and fluctuations in exchange rates can impact revenue. A weaker local currency can make exports more competitive, increasing revenue and potentially elevating stock prices.

  • Financial Performance

You should carefully analyse the ethanol company's financial performance by examining its revenue, profit and cash flow trends over recent periods. When evaluating ethanol stocks, prioritise companies with robust financial statements.

  • Supply Chain Reliability

When considering investing in the best ethanol stocks, prioritise companies that have a consistent and reliable supply of raw materials, like sugarcane. This helps reduce the risk of production disruptions and ensures smoother operations for the company.

  • Competition

Ethanol stocks compete for sales through auctions with oil marketing companies. Companies with better margins will have an advantage over their peers.

Should You Invest in Ethanol Stocks?

Investing in ethanol stocks requires careful consideration. Factors like commodity prices, government policies, and competition from alternative fuel sources influence the ethanol sectors. While there is potential for growth in this sector, regulatory changes, market dynamics, and technological advancements can impact their performance.

Before investing in ethanol stocks, it is crucial to research and stay informed about industry developments. Upon regularly reviewing your investment strategy, you can ensure that it aligns with your financial goals and risk tolerance.

Summing Up

The ethanol sector in India offers promising investment opportunities amidst the country's increasing focus on renewable energy sources and reduced reliance on fossil fuels.

Before investing in top ethanol stocks in India, it is crucial to understand the various factors that influence the market. Moreover, you can seek advice from a financial expert who can help you select the best ethanol stocks for maximised investment returns.

*Stock Selection Criteria for Top Stocks Based on Analyst Rating

Investors must carefully read through the following information on stock selection criteria while running through the stocks based on analyst ratings-

These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).  

Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. 

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

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Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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