Many nations are turning to ethanol in the wake of recent climate change initiatives. It has led to an increase in ethanol prices in present times. Recently, the government announced that it plans to achieve net zero emissions by 2070. Ethanol along with the Electric Vehicles sector will help India achieve these sustainability goals.
Ethanol mixed with petrol in a 90:10 ratio helps in reducing tailpipe emissions, leading to fewer carbon emissions. Due to this, the government has made it mandatory to use this ratio in blended fuel. Further, they are planning to increase this ratio from 90:10 to 90:20 in the near future. This would skyrocket the ethanol demand and its prices, thus propelling ethanol stocks. It will provide a tremendous opportunity not only for sugar manufacturers and alcohol producers but also for common investors of ethanol stocks India.
As per the research conducted by the International Energy Agency, India will surpass Brazil and the United States of America to become the third-largest economy for ethanol by 2026. India is one of the largest producers of ethanol in the world and continues to increase its production capacity over recent years.
Factors to consider before investing in Ethanol stocks:
To zero in on the best ethanol stocks in India, you should have a clear understanding of the ethanol industry. Here are some basics:
- Sugar Industry: Ethanol production depends on the sugar industry, which is heavily reliant on the monsoons, water availability in regions, irrigation and so on. A lack of water can lead to poor sugarcane production and in turn affect ethanol prices and supply.
- Demand For Ethanol: Ethanol is a more sustainable and environmentally friendly source of energy. Therefore, it has more demand in countries like India and China, which are shifting towards biofuel.
- Diversification: Buying ethanol stocks allows you to diversify your portfolio and protect you against market volatility and risk.
- Inflation: To protect your money against inflation, it is better to invest in commodities like ethanol. As the prices of these commodities rise along with inflation.
Best Ethanol Stocks in India
Here, we have listed a few top ethanol stocks in the Indian Stock Market, that you can invest in 2023 to receive good returns.
Praj Industries is the leading ethanol producer in India, with its business verticals in bioenergy, water and wastewater treatment. Under Bioenergy technology solutions, it serves more than 75 countries worldwide with fuel-grade ethanol in compliance with country specifications such as 1G ethanol, 2G ethanol and so on.
Balrampur Chini Mills Limited is one of the largest integrated sugar producers in India. They are also involved in ethanol production and produce over 65 million litres of ethanol annually. Geographically, they have a strong presence in Uttar Pradesh, which is the leading sugarcane-producing state in India. The mill has also invested in power plants that can produce energy from bagasse, a byproduct of sugarcane to reduce carbon emissions.
Similar to Balrampur Chini Mills Limited, this company is also among the integrated sugar manufacturers of India. They can process 65 million litres of Ethanol annually. The company’s business segments are sugar, chemicals, energy and power.
They have also invested in several sustainability and renewable energy projects such as wind energy projects and so on. They can produce high-quality ethanol with their state of art distillery system.
Triveni Engineering has two main business segments: Engineering services and Sugar related industries. It is the second-largest producer of sugar. Sugar Production along with alcohol distillation generates most of the business revenue. Its business segments include ethanol production, sugar manufacturing, alcohol production, power co-generation, power transmission, industrial gears and gearboxes, defence, water purification technologies, and FMCG brands.
Dalmia Bharat Sugar and Industries Limited operate several alcohol distilleries and sugar mills across the country. They have a total sugarcane crushing capacity of 22,500 tonnes per day and produce over 200,000 tonnes of sugar and 40 million litres of ethanol annually. The company has also invested in sustainability, research and development to develop new and innovative technologies for the production of biofuels.
Shree Renuka Sugars Limited has a total sugarcane crushing capacity of 20,500 tonnes per day and produces over 2,00,000 tonnes of sugar and 105 million litres of ethanol annually. They have a strong presence in the sugarcane-producing regions of Maharashtra and Karnataka and have invested in several renewable energy projects, including bagasse-based cogeneration power plants and wind energy projects. It also has a 600-kilolitre-per-day distillery capacity. In 2019, it contributed 20% of India's sugar exports to other countries.
Bannari Amman Sugars Limited is a leading sugar and ethanol producer in India that operates several sugar mills and ethanol distilleries in Tamil Nadu. The company has a total sugarcane crushing capacity of 20,100 tonnes per day and produces over 200,000 tonnes of sugar and 70 million litres of ethanol annually.
EID Parry India Limited specialises in producing nutraceuticals and operates several sugar mills and ethanol distilleries in Tamil Nadu for the past 225 years. The company has a total sugarcane crushing capacity of 35,000 tonnes per day and produces over 3,00,000 tonnes of sugar and 105 million litres of ethanol annually. It provides specialised pharmaceutical sugar grades that can be used in various pharmaceutical applications, such as tablet coatings, liquid orals, dry syrups, intravenous services, and drug delivery systems and so on.
Simbhaoli Sugars has a strong presence in the sugarcane-producing regions of Uttar Pradesh.
It operates more than 14 facilities in the northern Indian State of Uttar Pradesh with a combined sugarcane crushing capacity of 800 kiloliters per day (KLD) and can crush 1,36,000 tonnes of sugarcane per day. It is one of India's top producers of Ethanol-based green fuel.
Conclusion
As the government encourages renewable and clean energy to reduce carbon emissions and improve air quality, investing in ethanol stocks in India can be a wise choice for investors. It offers the opportunity to diversify portfolios and capitalise on the increasing demand for clean energy sources. In this article we have discussed the top ethanol producers in India, who have a strong presence in the renewable energy sector. These companies also represent top ethanol stocks. However, it is important to note that investing in stocks involves risk, and it is important to do your independent research, before making any investment decisions.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.