Sugar stocks tumble as ethanol diversion halted

19 Oct 2026, 12:26PM

Sugar stocks declined up to 6% in early trade on October 19 after the government directed oil marketing companies to stop procuring ethanol produced from diverted sugar for the 2026/27 supply year. The latest ethanol tender excludes supplies made from sugarcane juice, sugar syrup, and B-heavy molasses, limiting the industry's ability to divert sugar towards ethanol production.

Shares of Balrampur Chini Mills, EID Parry, Triveni Engineering, Bajaj Hindusthan Sugar, Shree Renuka Sugars, and Dhampur Sugar fell between 2% and 6% in morning trade.

The move restricts companies' flexibility to switch between sugar and ethanol production based on market conditions, which could pressure margins and reduce returns on ethanol-related investments. The government's decision is aimed at boosting domestic sugar availability and helping ease elevated sugar prices in the country.