Jute stocks in demand; Ludlow Jute, Cheviot rally up to 17%; here's why

Shares of manufacturing and sale of jute goods firms rallied up to 17 per cent on the BSE in Monday’s intra-day trade after the government on Friday approved mandatory packaging of 100 per cent food grains and 20 per cent sugar in diversified jute bags for the Jute year 2023-24. A Jute year is from July 1 to June 30.

Shares of Ludlow Jute & Specialities surged 17 per cent to Rs 99.90 and Cheviot Company rallied 16 per cent to Rs 1,480 on the BSE. These stocks were quoting at their respective 52-week highs. Shares of Gloster soared 9 per cent at Rs 922 in intra-day trade. In comparison, the S&P BSE Sensex was up 0.06 per cent at 69,865 at 10:51 AM.

The central government purchases jute sack bags worth approximately Rs 12,000 crore every year for packing of foodgrains, hence ensuring guaranteed market for the produce of jute farmers and workers, news reports suggest. READ ABOUT IT HERE

The jute sector plays a crucial role in the Indian economy, particularly in Eastern India, by providing direct and indirect employment opportunities and generating export revenue. India is the world’s largest producer of jute, which is also known as golden fibre.

The jute industry is grappling with shrinking acreage, excessive dependence on government orders, competition from Bangladesh, and a lack of modernisation and diversification. Additionally, the industry has been influenced by government policies in key areas over the years.

With increasing awareness about the adverse effect of synthetic packaging material to the environment, the demand of jute goods is poised to grow both domestically and internationally. Demand for environmentally friendly products augurs well for value added JDPs like jute geotextile, horticultural products and lifestyle products like jute shopping bags, floor coverings and apparels, said Cheviot Company in its FY23 annual report.