India’s sugar sector is currently facing a perfect storm: weak domestic prices, tight government export controls, and uncertainty around ethanol blending policies. As a result, most sugar stocks have wilted, trading far below their recent peaks. For example, Triveni Engineering is down 31% from its 52-week high, Dalmia Bharat Sugar has slipped 33%, and Shree Renuka has plunged 42%.
Yet amidst this sector-wide decline, two stocks have defied gravity: Balrampur Chini Mills and EID Parry. While the sector struggles, Balrampur has delivered a 40% return and is only 11% off its high, and EID Parry has surged 45%, trading near all-time highs. What explains this resilience? Let’s take a closer look at these two sweet exceptions.
Balrampur Chini Mills: Operational Excellence Meets Smart Diversification
Integrated Business Model
Balrampur Chini is India’s second-largest sugar producer, with all its 10 plants located in Uttar Pradesh. The company’s close ties with local farmers and a fully integrated model (covering sugar, ethanol, and power) set it apart.
In recent years, Balrampur has strategically diversified into the distillery business and ventured into bioplastics through a polylactic acid (PLA) project. This diversification helps mitigate the sugar price volatility that plagues its peers.
Stable Margins Amidst Topline Pressure
In FY25, Balrampur’s revenue fell a modest 3% year-on-year to ₹5,415 crore. However, its share of revenue from non-sugar segments rose to 22.8% from 16.6% in FY21, a sign of its steadily diversifying portfolio.
While net profit dipped 20.5% to ₹344 crore, this decline was smaller than that of most competitors. Margins only contracted by 110 basis points to 13%, supported by firm sugar prices, better cane quality, and robust operational execution. In contrast, Triveni Engineering’s margins shrank by 380 basis points.
Sugar Remains Core, Efficiency is the Key
Sugar continues to be Balrampur’s profit engine, accounting for 71.3% of its PBIT. Despite national production constraints, its sugar revenue grew 4.3% to ₹4,897 crore in FY25, with segment PBIT rising 10% to ₹468 crore.
A critical differentiator is Balrampur’s ability to manage cane varieties. It reduced its dependence on the disease-prone 0238 cane variety to just 6% of its mix, resulting in better recoveries and higher output. Gross recovery declined just 0.44%, the lowest in eastern UP, while cane crushing volumes dipped only 1.7%.
Currently, the company holds about 750,000 tonnes of sugar inventory, providing revenue visibility and cash flow stability for the upcoming quarters.
Distillery Segment: A Tough Year, But Adaptable
The distillery segment faced challenges in FY25, with revenue falling 15% to ₹1,430 crore and PBIT plunging 41% to ₹192 crore. The flat ethanol price and restrictions on sugarcane juice diversion impacted margins, which slipped to 13.4%.
However, Balrampur’s flexible setup—allowing switches between cane juice, molasses, and even maize—helped mitigate the downside. By shifting to maize ethanol during off-seasons, Balrampur managed to limit the blow.
Future-Proofing with Bioplastics
Balrampur’s ₹1,750 crore investment in an 80,000-tonne PLA plant is a forward-looking bet. Expected to commence by Q3FY27, this project is anticipated to generate ₹2,000 crore in annual revenue with a high 35% margin. Supported by Uttar Pradesh’s bioplastics policy, it aims to target packaging and textile markets, helping reduce reliance on cyclical sugar and ethanol businesses.
EID Parry: Reinventing Through Consumer and Nutraceutical Diversification
Strong Diversification Strategy
While EID Parry is one of India’s oldest sugar companies, it has successfully transformed into a diversified agri-business. Besides ethanol, it has ventured into consumer products and nutraceuticals, creating new growth pillars.
In FY25, standalone revenue rose 13% to ₹3,168 crore, driven largely by ethanol and consumer segments. However, the company reported a net loss of ₹428 crore, mainly due to a ₹427 crore impairment charge on its sugar refinery subsidiary. Without this one-off, operational performance remains solid.
Consumer Products: Scaling Fast Despite Losses
EID Parry’s consumer products division—comprising sweeteners, pulses, and millets—grew 65% to ₹884 crore in FY25. Although it reported a loss of ₹58 crore, this segment is in investment mode, focusing on expanding its reach in southern India. The company’s retail distribution has increased tenfold in four years, setting it up for future growth.
The management targets a 12%+ annual revenue growth from this segment going forward. While profitability remains a work in progress, this diversification reduces dependence on the volatile sugar and ethanol segments.
Sugar Segment: Operational Headwinds
The sugar business faced headwinds, with revenue falling 13% and PBIT turning negative at ₹86 crore, compared to a profit of ₹34 crore in FY24. Higher cane costs (+7.5%) squeezed margins, though recovery rates improved slightly to 10.8% thanks to better weather conditions.
Ethanol Business: Growth Amid Margin Pressure
EID Parry’s distillery segment was a bright spot in terms of revenue, up 38% to ₹1,102 crore, supported by strong ethanol realizations of ₹67 per litre. However, profitability suffered due to higher cane costs and stagnant ethanol prices set by oil marketing companies, leading to a margin compression to just 3.3%.
Nevertheless, the flexible feedstock setup (molasses and grains) provided an edge, allowing the company to adapt production plans quickly in response to price and policy changes.
Valuation Advantage
Both Balrampur Chini and EID Parry trade at a price-to-earnings (P/E) multiple of about 27, significantly lower than Triveni Engineering’s 34. This relative valuation advantage, combined with strategic diversification and operational efficiency, has attracted investors despite the sector’s overall pessimism.
The Sweet Difference
While most sugar stocks are stuck in a bitter cycle of falling prices and policy uncertainty, Balrampur Chini and EID Parry have emerged as resilient outliers. Their commitment to diversification, operational excellence, and forward-looking strategies—like bioplastics and consumer brands—has helped them navigate the current turbulence and position themselves for more stable, long-term growth.
For investors, these two represent the “sweet spots” in an otherwise challenging sector, proving that smart execution can outshine even the toughest macro headwinds.
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Disclaimer
This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.