If you are an investor with low capital invested in the market, then you must have come across the word “Penny Stocks”.Through investing in these stocks an investor generally hopes to multiply its capital in a limited time period. But the harsh reality is most penny stocks are loaded with huge risks. It has the potential to do more harm than good. Therefore, there are limited penny stocks that are in demand and are worth investing.
Sugar Industry or sweet stocks intrigued many investors through their strong rally in the past few years. They continue to stay in the limelight even today due to the government’s continuous push towards ethanol production. In this article, we’ll look at such small sugar manufacturers, aka, top 8 Sugar penny stocks in 2023.
1. Indian Sucrose Ltd
Started its operation in 1990. Indian Sucrose Ltd(ISL) is a Punjab- based sugar manufacturing company engaged in the production of sugar, molasses, bagasse and other products. Sugar production constitutes 90% of its revenue in FY22. The company holds an installed capacity of 9000 tonnes of cane per day(TCD).
| Market Cap.(cr) | 101 |
| Promoter Holding(%) | 64.48 |
| P/E ratio | 4.24 |
| Operating Profit Margin(%) | 13 |
| ROCE(%) | 18.4 |
2. K.M. Sugar Mills Ltd
K.M. Sugar Mills ltd is a UP-based manufacturing company engaged in the production of sugar, distillery products as well as in power generation. Besides these, the company is also involved in sugar trading as well as other manufacturing activities. The company has a versatile team for procurement of sugar, logistics and sugar sale.
| Market Cap.(cr) | 244 |
| Promoter Holding(%) | 56.52 |
| P/E ratio | 12.7 |
| Operating Profit Margin(%) | 13 |
| ROCE(%) | 15.2 |
3. Vishwaraj Sugar Industries
Vishwaraj sugar Industries is a small cap company known for its diverse product portfolio. Besides Sugar, Molasses and captive power its product portfolio also include rectified spirit, ENA, ethanol, vinegar, press mud, and compost. Its present installed sugarcane crushing capacity stands at 10,500 TCD.
| Market Cap.(cr) | 301 |
| Promoter Holding(%) | 33.70 |
| P/E ratio | 5.84 |
| Operating Profit Margin(%) | 20 |
| ROCE(%) | 12.7 |
4. Piccadily Agro Industries
Piccadily Agro Industries is the small-cap manufacturer of white crystal sugar operates an installed capacity of 5000 TCD. Its product portfolio is mainly focused on two segments: Sugar and distillery which contributes 54% and 46% of its operational revenue. Additionally, it has co-generation power capacity of 6 MW and a distillery capacity of 60 KLPD.
| Market Cap.(cr) | 412 |
| Promoter Holding(%) | 70.97 |
| P/E ratio | 21.7 |
| Operating Profit Margin(%) | 12 |
| ROCE(%) | 17 |
5. Shree Renuka Sugars
Shree Renuka Sugars is a global agribusiness and bio-energy corporation. Globally, Company is one of the leading sugar refiners in the world. The company comprises 11 operational mills globally (seven in India) and equipped with integrated Ethanol and Co power generation
Capacity. Additionally, the company also has two large port based sugar refineries in India.
| Market Cap.(cr) | 101 |
| Promoter Holding(%) | 64.48 |
| P/E ratio | 4.24 |
| Operating Profit Margin(%) | 13 |
| ROCE(%) | 18.4 |
6. Kothari Sugar and Chemicals
Established in 1961, Kothari Sugar and Chemicals was set up in Trichy, Tamil Nadu, belonging to the HC Kothari group. The company operates two sugar manufacturing plants and also produces captive power, industrial alcohol, and bio compost. Production of sugar contributes 62% of its sales revenue. Co-generation of power and distillery products contributed to 26% and 25% of the income respectively.
| Market Cap.(cr) | 338 |
| Promoter Holding(%) | 73.53 |
| P/E ratio | 7.28 |
| Operating Profit Margin(%) | 23.91 |
| ROCE(%) | 16.8 |
7. Rana Sugars Ltd
Established its first unit in Bettiah Sevian, Punjab in 1993. Rana group of companies forayed into sugar manufacturing business along with its diversified product portfolio which includes sugar, alcohol, power generation as well as textiles. It also proved its capability by generating power from the bagasse (by-product of sugar).
| Market Cap.(cr) | 350 |
| Promoter Holding(%) | 22.64 |
| P/E ratio | 6.75 |
| Operating Profit Margin(%) | 13 |
| ROCE(%) | 26.1 |
8. Bajaj Hindustan Sugar Ltd
Bajaj Hindustan Sugar Ltd is the country’s leading manufacturer of sugar and ethanol. The company is also the pioneer of the government’s fuel ethanol initiative and as of now is producing about 30 million liters of Ethanol per year. The company consists of 14 sugar plants all located in UP. It has its headquarters in Mumbai. Company is sustainable in case of power as it generates sufficient power through the bagasse produced in its mills.
| Market Cap.(cr) | 1,795 |
| Promoter Holding(%) | 24.96 |
| P/E ratio | – |
| Operating Profit Margin(%) | 3 |
| ROCE(%) | – |
Elements Responsible for The Rise in Demand of These Sugar Penny Stocks
- Ethanol Blended Fuel(EBF): Government’s initiative to implement Ethanol Blended Fuel(EBF) Programme throughout the country has led to a rise in production of ethanol. Ethanol is produced mainly through sugarcane molasses segregated in sugar mills, which ultimately boosted the sweet stocks by creating huge demand in the market. As per the data the sugar production this year(2023) is up by 4 lakh tonnes in comparison to the previous year.
- Sustainability in Sugar Industries: Most of the sugar manufacturers or companies are based on sustainability. As they are able to meet their energy requirements by themselves. They are generating sufficient power to run their sugar mills from the bagasse, which is a byproduct of sugar.
- Global Rise in Sugar Prices: Globally, most of the countries aim to reduce the stress on the world’s oil reserves. Because of which they came with an alternative concept known as Ethanol Blended Fuel. This will not only reduce the petrol consumption but will also reduce the pollution marginally. This is the reason why most of the sugar manufacturers are being encouraged by their respective governments to increase the production of ethanol, which ultimately will reduce the supply of sugar resulting in price hike.
Conclusion
At the end of the article, we observe that sugar manufacturers are boosting their Ethanol productions to provide support to the government’s ambitious project of Ethanol blended fuel. This will result in enormous revenue generation in the industry. At the same time if we talk about sugar penny stocks, we came to the conclusion that the larger penny stocks have diversified revenue sources than the smaller penny stocks. Additionally, larger penny stocks have comparatively lower debt-equity ratio. However, investors must exercise due diligence before investing in penny stocks.
