The rankings agency estimates that revenues of built-in sugar mills to increase by 10 per cent in monetary 12 months 2025, supported by an anticipated enhance in gross sales volumes together with agency home sugar costs and better distillery volumes after the operationalisation of recent capacities.
Girishkumar Kadam, Senior Vice-President & Group Head – Company Scores, ICRA, mentioned: “ICRA tasks the web sugar manufacturing to say no to 30 mt in SY2025 from 32 mt in SY2024 based mostly on the expectation that greater diversion can be allowed in direction of ethanol manufacturing amid the excessive sugar inventory stage. Even when the diversion in direction of ethanol is elevated to 4 mt in SY2025, the closing sugar inventory stage is more likely to stay reasonably excessive. Due to this fact, readability on the coverage for permitting diversion past the cap of 1.7 mt and the exports stay the important thing monitorables for the sector. Additional, home sugar costs, that are presently within the vary of ₹38-39/kg, are anticipated to stay agency until the beginning of the following season, thereby supporting the profitability of the mills.”
Additional, the working revenue margins of the sugar mills are projected to stay snug in FY25, according to FY24, due to agency sugar realisations and better cane costs for the sugar 12 months 2025 (SY2025) beginning October. ICRA’s outlook for the sugar sector is Steady, backed by the anticipated enchancment in revenues, steady profitability, and comfy debt protection metrics together with the Authorities’s coverage help, together with the ethanol mixing programme (EBP).
“The ethanol mixing pattern has remained encouraging until Ethanol Provide Yr (ESY) 2024, given the upper contribution from grain-based distilleries. For ESY2025, the extent of the rise in diversion in direction of ethanol manufacturing over and above the cap stays vital to fulfill the 20 per cent mixing goal set by the Authorities of India. The opposite key challenges that additionally should be addressed embrace the provision of adequate feedstock for grain-based distilleries and the infrastructure ramp-up required to help greater mixing ranges. Additional, the well timed launch of the E-20 (20 per cent ethanol blended)-compliant automobiles and public adoption of the identical could be key to reaching the mixing targets,” Kadam mentioned
ICRA expects the closing sugar inventory to be round 9.1 mt as on September 30, 2024, appreciably greater than the sugar inventory of 5.6 mt as on September 30, 2023. This might be equal to three.8 months of consumption (PY: 2.4 months). The closing inventory is predicted to additional enhance to over 4 months as on September 30, 2025, per ICRA’s estimates.
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