Sugar scrips continue to fall

More than two weeks after the government announced a partial lifting of ban on sugar exports, sugar stocks continued to perform miserably. Since the announcement, the stocks have slumped by about 3 to 10 per cent.

The partial lifting of the export ban has evidently failed to lift sugar stocks, with their underperformance continuing. The share price of Bajaj Hindusthan, the country's largest sugar producer, has declined by about 10 per cent to Rs 203.70 a share since December 19.

While Bajaj has no export obligation, the share price of Sakthi Sugar that has an obligation of 2 lakh tonne has also declined by about 8 per cent to Rs 97.75 a share.

"International sugar prices are marginally lower compared to the domestic prices. However, with the export opening up, companies would be under an obligation to export. There is excess production in the country, affecting domestic realisations. The input cost has gone up, with a higher cane price (Rs 125-130 a quintal as against Rs 115-125 last year) declared in Uttar Pradesh as well as in other states," said S P Tulsiyan, an investment adviser.

While companies such as Bajaj Hindusthan and Balrampur Chini have registered a decline in profit in the last quarter, the next results could see the bottomline of sugar companies with small capacity turning negative, he added.