I was wondering whether we can profit form both sugar cycle and couter cyclical investing…
now that the sugar upcycle has played out well and the sugar mills have sort of paid back most of their debt…and the next sugar season onwards we are going to see excess prodution and beginning of downcycle…
what would the sugar mills do to protect themselves during the coming downcycle of around 3-4 years?
i would guess…that they would increase their ethanol making capacity to protect themselves…
In the earlier upcycle, the sugar mills had gone for increasing their cogen capacity to tide over the bad days ahead…but that may not be possible in the present upcycle…because no additional crushing capacity has been added and due to renewable power, the cost of power is continuously declining…
Therefore the counter cyclical move by sugar mills is more likely to be ethanol…where the Modi govt has streamlined ethanol procurement process and its one of the successes of this govt…
i am writing this because…PRAJ INDUSTRIES has become very very bullish…on the verge of a multiyear breakout on looong term charts…
thus the counter cyclical investment wrt to suagr would in my opinion be investment in Praj industries…
its almost debt free…and now has very less downside risk and good upside potential
Quarterly chart of Praj with momentum indicator…stock on verge of a multi year breakout and indicator turning up is a heady combination…very very bullish…stock has potential to go up hugely in coming few quarters…