Thanks Niraj.
If any one have some idea for cost structure (production cost) for Sugar, Ethanol and power please throw some light on it.
Regards,
For sugar Take SAP as 280 REcovery @10 % Then cost of sugar is 28+6-3 =31 .Here RS 6 is the cost of convesion & Rs 3 is revenue from sale of Mollasses & Baggase
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Pl refer to my above post dated 17th Feb where I had pointed out a turnaround in UP based sugar stocks. It now seems (with the benefit of hindsight) that it I have got the end of consolidation in sugar stocks correctly. All the said stocks have bounced quite significantly and have even turned around on weekly charts. This has been helped by domestic sugar prices which are now @33.8 rupees / kg (delivery) and also international sugar price which has rapidly risen to just below 15 cents per pound.
Now I think we can look forward to all the sugar stocks rallying quite a bit from the present levels…Those who missed buying earlier can still join the sugar rally by buying DCM SHRIRAM (for conservative investors) and Shree Renuka ( for nimble footed risk takers). Even Bajaj Hindustan can be bought by those who have the ability to quickly exit the stock when things go bad.
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A good article on sugar scenario in global market . Now sugar stocks reaching a critical resistance level and actual fundamental development in near future can only support higher levels. There are many crucible events to watch out for in next 6 months and its likely impact on sugar stocks.
(1) Monsoon conditions this year across sugar producing belt
(2)SAP announcement by UP govt in oct - nov , 2016 particularly considering this is an election year
(3)Coming two quarters result likely to be good or best after 2008 for all sugar companies and corresponding impact on sugar company stocks
(4) Impact of movement of Brazilian real on sugar prices and movement of petrol prices in international market in next few months. This year brazil sugar production is expected to be better than previously expected.
(5) Previous sugar cycle analysis reveals that by feb/ march 2017 sugar company stocks likely to peak out unless some other major fundamentals development , supply shocks happen.
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hi Mehnazfatima,
I have posted a query in Goodricke Group thread related to technicals. It would nice if you could have a look at it.
Regards,
Roberto el S
Pl refer to my post dated 17th Feb wherein I had pointed out to a turnaround in Balrampur @76.80…With the benefit of hind sight, it now appears that I had timed the turnaround correctly…the stock went from 76.80 to 115 and then consolidated…I think that balrampur is now coming out of consolidation phase as indicated by the chart below…
Disc: I am heavily invested in Balrampur and have bought more on Friday…
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Mehnaz Jee, Congratulations on this. What is your opinion about the continuity of this run in Balrampur… Thanks
Sugar Queen: Nice to know that you are heavily invested. Balrampur is going great with formation of higher top higher bottom. Very bullish chart. I just want to know which are the main inputs in your non standard momentum indicator. It seems to working good. You can share some of the secrets of SQ software.
Truly within country we are likely to see first year of deficit after consecutive 5 years of surplus. So fundamentally Balrampur Chini and other sugar mills are going to mint money in coming years.
Sugarbull: thanks… can you send me a personal message, so that i can respond appropriately
Fatimaji: How to send PM. Need your contact details
A few days ago Mr Manickam of Sakhti sugars in an interview on CNBC TV18 had said that the effect of stock limit s on traders is already priced in by the market and that sugat price may again start moving up after May 15…
And sure enough, if we look at the sugar delivery price and examine the daily charts with help of volatility indicators, then it is seen thay there are clear signs of sugar price coming out of the consolidation zone… there may by a volitility breakout in sugar on the upside in the next 5-10 days…
This burst in sugar price may cause all the sugar stocks to embark on the next leg of the price rally…it appears that sugar stocks will close in the green both for May and june months.
It is axiomatic that when the price of sugar starts going up… sugar stocks cannot be down for long…
Pl refer to my post on 30th Jan and 3rd Feb, wherein i had pointed out signs that sugar was coming out of consolidation and thereafter sugar went up from 31 rupees per kg to around 38 rupees before going into the present consolidation… now it appears that the present consilidation too may be coming to an end in the next 5-10 days
Investors in sugar stocks need to focus on few things which have not yet been picked up by the market…
- In an interview on CNBC TV18, manoj Saraogi of balrampur Chini has said that in the power circles there is a serious talk going on about adopting the price linkage formula if and when the sugar price reaches a certain higher level. he further said tthat although the percentage recommended by the Rangarajan committee was 75%, the UP sugar industry will not grudge a few percentage points more…From this we can infer that the price linkage formula will be implemented by the UP govt and it may be around 77-78%…if such a thing does happen, then the cyclical risk gets pushed to the farmers to a large extent and the industry will get its stable returns.
The linkage formula favours those producers who have expanded without much dilution of the equity such as Balrampur and Dhampur and punishes those like Bajaj Hind which have massively diluted their equity…because now the diluters will be pushed to a lower orbit of low eps
- Secondly, the sugar industry from maharshtra with the backing of the Maharshtra Govt has been demanding that financial assistance be given to it for the next yesr because one third mills in maharshtra will not do any crushing and almost no mill will be alble to crush to the installed full capacity because of shortage of cane. The maharshtra govt has said that the sugar production from Maharshtra for the next season will be just 5 -5.5 million tons.
Also when a group of BJP MPs from maharshtra met the Prime Minister to protest against the effforts of the Govt to curb the rise in sugar prices, the PM assured them that the import duty on sugar will not be reduced from 40%
- Although the food minister and ISMA are talking of there being no shortage of sugar for the next sugar season, there is a very big probability that sugar production may fall to 22 million tons. Just on account of the fall in sugar production in Maharshtra. If we take into account the drought in Karnataka, Gujrat, Andhra Pradesh…then it can be as low as 21 million tons.
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Also there are news reports that in Gujrat, the sugarcane plantation has fallen by 97%…that means that there wont be any sugar production in Gujarat in the next sugar season. And as per yesterdays Hindu newspaper, the Karnataka minister for Cooperation and Sugar - Mahadeva Prasad has said that due to drought the sugar production in Karnataka will fall by around 30%…we can expect a similar situation in Andhra and Telangana states.
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@Mehnazfatima - from your posts it is apparent that sugar prices are bound to rise which will benefit the sugar companies.
But we cannot ignore the govt intervention. As it is a cyclical industry, the benefits are unlikely for long term. part of the benefits i believe will go in re-paying debts.
Also, in case of substantial rise in sugar prices the govt is likely to increase the cane prices to farmers esp in UP with elections coming up next year.
Disc : Invested in Kesar ent. Booked partial profits recently.
World sugar stock at historic low level projected by USDA. It is expected that india can turn into next importer of sugar next year. Already today govt stopped export subsidy scheme for export of sugar. Next steps can be ban of sugar export as international prices keep moving up. I own estimate that next season sugar production in india can varies between 18 million tn (worst case scenario) to 23.5 million tn (best case scenario) as previous year drought is extreme and once in 20 years kind of situation which likely to push international sugar prices to upward of 25 cent/lb from current about 16 cent/ lb. How much indian sugar mills can be benefited from this situation however remains uncertain due to sugar policy flip flop from govt side.