CANE SOWING DATA ::to support my view that SUGAR SUPER CYCLE IS HERE TO STAY TILL 2018 MINIMUM.
cane sowing(lakh hectare)
1)50.32 ,year 13-14
2)48.74 ,year 14-15
3)49.6 ,year 15-16
4)45.55 ,year 16-17 (Till26th august 2016,very limited scope for any major improvement here)
this year sowing is lowest in last 4 years or may be more(as earlier data i don’t have) this crop(2016-2017) will come for crushing after OCTOBER 2017.
Hope you all can see what i am seeing.
Best Regards
Rajeshji: sugar upcycle is a relatively short one…it lasts for just 2-3 years…and mills have to shore up their balance sheet in this period, otherwise they will not survive the next downcycle…
In the sugar rally of 2003-06, there have been occasions where the frontline stocks like balrampur have fallen by around 40-50%…
The most important thing is that usually the corrections havr been just 2 months long and after that the stocks recovered and surpassed their pre correction highs…
The third issue is that the corrections have been very steep…(fall of 40-50 % in just 1-2 months…the steepness of this fall causes many investors to exit believing that the rally has ended…
In the present sugar rally, Dhampur too has displayed that kind of volatility…twice it has fallen to around 46 from a high of 80… .
We have already completed one month of steep price fall…at the most there may be time correction of 4-6 more weeks…in this time the sugar stocks may touch their supports atleast once…
The supports for Balrampur is 97 and for Dhampur is 104.5 and 97…
When the stocks are at their support levels, those who remember the above aspects of sugar rally and buy will reap immense benefits…when the rally resumes…while those who sell in the fall will miss the next leg of the rally…
Dont bet on a long correction…as it is Bannari, Triveni, KM sugar and Renuka are showing signs of coming out of consolidation…
Dear Mehnaz- Can you please provide inputs whether stocks I have in my earlier thread qualify for investment once the proposed correction is over?
Dear Deepak- Can you please provide the link to the useful data that you have cited?
Sure dear.have a look.
http://pib.nic.in/newsite/pmreleases.aspx?mincode=27
Again refrence to previous post…balrampur tarding at 8 pe and twice the book value whereas dhampur trading @5 pe and at 1 times book value…so balram is getting higher valution as daddy of sugar pack…it is not cheap by any means…its is fairly valued…
And it will lag w.r.t dhampur and dwarikesh due to their very high EPS growth …
Regards
Mehnazfatima Ji,
I can understand your point. Your logic is coming from chart. I see the fundamentals. I can see clearly how Maharashtra and Karnataka drought has downplayed the role of mills like Dalmia and spoiled the game of Renuka. I am afraid Renuka may lose this chance to build balance sheet. There is hope in Brazil, refinery, distillery. If charts are supportive, its like music to me as I am more than happy to be wrong. My biggest investment is Renuka.
I fully agree with you that sugar rally is not over, it is midway to peak.
I am trying to play it as suggested by gurus i.e. purchased at slightly above bottom in August-October 15. Now sit tight and sell early next year whatever the price. I hope this will work.
Am surprised that Balrampur and intact other sugar stocks are seen as fully valued. I believe the fear of last cycles is still there in everybody’s mind. I think otherwise. This time the sugar cycle is more structural and the govt. will not take any stupid measure to kill the industry as in the past. Additionally, Balrampur is clearly the leader and best stock to own. Just look at the distribution of Rs 3.50 interim dividend. No other company has given dividend. It shows the intent and the confidence that the Company has in the future profitability. Hold and sit tight for the time being.
About 4 days ago (post no 548) I had written about the anomalous behaviour of Bannari and Renuka vis a vis other sugar stocks which are in a downtrend… There is a positive announcement about debt restructuring of renuka in Brazil and the stock has bounced a bit today…it now need just 1-2 days of buying support to embark on an uptrend…atleast it appears so from the daily charts…as I had written earlier, Renuka never really went into a downtrend…much unlike other sugar stocks… pl have a look at the daily chart of Renuka
Downward momentum is decreasing in case of Balrampur and Bajaj Hind while it is increasing in the case of Dhampur and Dwarikesh…Upper ganges is almost at a standstill, hence it will take a few days to see in whuch direction it starts moving…
RABO BANK NEW RESEARCH REPORT NEWS::::
http://m.economictimes.com/markets/commodities/asia-sugar-output-seen-signficantly-lower-in-2016-17/articleshow/53908870.cms
Hi Mehnaz, Many thanks for your technical analysis. I have been analysing the sugar industry for last 10 years as a banker and had the chance of meeting sugar corporates in UP mainly Triveni, Balrampur and Bajaj over the years. I have seen 2 cycles in these years and going by my experience, I came to the conclusion that its always better to play with conservative companies in sugar cycles. While one may earn lesser profits however chances of losses are significantly curtailed. While I am fully in sync with the assessment that Dhampur will have more upside than Balrampur however the risk on downside is much much higher and honestly speaking, its next to impossible to correctly judge the end of upcycle in sugar industry. Whereas companies like Balrampur use upcycles to repair their balance sheets and create buffer for down years, companies like Bajaj use up-years to indulge in extravagant things and non related expansions like they did in 2010 by venturing in power business. Balrampur quotes at premium to other players not without any reason. Mr. Murkumbi of Renuka had good reputation in the market till few years back however his short sightedness and greed of becoming too big in too short a period led to his downfall. Now most of the market does not take him seriously. On the other hand, Mr. Saraogi has built his reputation over the years and is known for good governance. While it depends on individual’s risk taking ability however I would bet on Balrampur in this upcycle for better margin of safety.
Any update on Dhampur AGM of today??
Amit Anam
international sugar organisation report ----Sugar price rally not over yet, says ISO, flagging ‘critically low’ stocks
Ethanol policy continues as before. No linking it to crude prices. Positive for sugar cos that manufacture ethanol . Also the new prices will be notified soon
good evening fatima ji.
dhampur balram are very near to support …slippling slowly-2 .hope they survive few days before Q2 countdown starts as immediate trigger is not there.hope they doesnt break the support and slip further
Deepakji: I am confident that the upcycle in sugar sector will last for one more year atleast…it can even continue for 2 more years…but from time to time the sugar rally will be challenged by huge selloffs and investor pessimism…
Data suggest going will be good due to increasing DEFICIT…but stock movements sometimes gives tough time.Next 2 weeks important ,hoping they respect their supports ans stays in 3 digits atleast.
what is EX-mill price nowadays …near 36/-…this Q2 & last Q2 exmill diff is BIG…hoping for stellar results
Stock limit imposed on mills
As per the decision, mills should not, at the end of September, hold more than 37 per cent of their total sugar available with them during the entire 2015-16 marketing year.
At the end of October, the sugar stock should not be more than 24 per cent of the total supply
First they forced pulses to come down from 200 to nearly 100 and now they are behind Sugar. This govt is more hawkish against inflation than even Raghuram Rajan
