“Elevated sucrose diversion in direction of ethanol in mild of presidency’s complimenting insurance policies is prone to end in ramp up of ethanol provides whereas limiting the sugar manufacturing. This coupled with wholesome sugar export prospects for the present fiscal would assist moderation in stock place and thus, decrease borrowing ranges on the fiscal’s finish however ongoing debt funded capex plans (for distillery and crushing capacities) for varied gamers,” Icra Senior Vice President and Group Head Sabyasachi Majumdar mentioned.
With improved working income and decreased debt ranges, the protection metrics and capital construction would emerge stronger by finish of fiscal 12 months, he added.
The report additional said that the home sugar costs rose to round Rs 34,000-36,000 per tonne in August-September 2021 after three years following sharp enhance in international costs in addition to onset of the festive season.
The worldwide raw sugar costs firmed as much as USD 420-440 per tonne in August-September 2021 in comparison with USD 270-280 per tonne in August-September 2020 within the anticipation of decline in Brazilian sugar manufacturing and thus, balanced international provide place, it mentioned.
In mild of surged international sugar costs, the export prospects look promising for the upcoming sugar season even when export coverage is not introduced, mentioned the report.
Icra estimates India to register sugar exports of round 4-6 million tonnes for SY 2022 (sugar 12 months), thus the closing inventory is predicted to be at round 7.1-9.1 million tonne as on September 30, 2022, in comparison with 8.6 million tonne estimated as on September 30, 2021, it mentioned.
Icra mentioned that the sugarcane UP-SAP is predicted to be hiked by Rs 25 per quintal whereas Honest and Remunerative Worth (FRP) has been elevated by Rs 5 per quintal for SY2022.
Thus, for SY2022, UP-SAP can be Rs 350 per quintal for early maturing selection and Rs 340 per quintal for regular selection whereas FRP can be Rs 290 per quintal, which might end in increased sugar manufacturing value.
Nevertheless, with a beneficial mixture of ethanol in direction of B-heavy or juice (feedstock) coupled with increased sugar realisations, the seemingly cane worth hike is predicted to be comfortably absorbed by the trade and the working margin is predicted to stay secure at 12.5-13 per cent in FY22.
“Doubtless hike in cane costs, particularly in Uttar Pradesh, although consistent with trade’s expectations, would arrest the enlargement in working margins that would have flown from improved sugar realisations, wholesome sugar exports along with ramped up ethanol provides with beneficial feedstock primarily based combine. However, the expanded scale and improved income combine would enable increased working income whilst working margin stays flat,” Icra Vice President and Sector Head Anupama Arora added.