6 Sugar Stocks riding India’s Ethanol blending push amid global tensions

SYNOPSIS: India’s ethanol push is gaining momentum, supported by policy mandates and rising crude prices, with ethanol-focused companies benefiting from increased demand, capacity expansion, and a structural shift toward cleaner energy sources.

The government has directed oil marketing companies (OMCs) to supply petrol blended with up to 20 percent ethanol across the country from 1st April 2026. As per the notification issued by the Ministry of Petroleum & Natural Gas, the fuel must meet a minimum Research Octane Number (RON) of 95. RON indicates a fuel’s ability to resist engine knocking – a condition where fuel burns unevenly, leading to performance issues and potential long-term engine damage.

At the same time, the government has provided some flexibility. In specific situations, OMCs may be allowed to sell ethanol-blended petrol that meets the minimum RON standards prescribed by the Bureau of Indian Standards, depending on regional requirements and time-bound conditions.

Ethanol, which is produced from sugarcane, maize, and other grains, is a renewable and cleaner-burning alternative to conventional petrol. The push towards ethanol blending is aimed at reducing India’s dependence on crude oil imports, lowering emissions, and supporting farmers by increasing demand for agricultural produce.

In a related development, on 16th March, the food ministry approved an additional export quota of 87,587 tonnes of sugar for the 2025-26 marketing year (October-September), following requests from sugar mills. Earlier, the government had allowed exports of 1.5 million tonnes and later provided an additional 5 lakh tonnes for allocation. However, only a portion of this additional quota was utilised, with the remaining quantity left unclaimed.

Meanwhile, global developments have added another layer of complexity. Rising geopolitical tensions in West Asia have continued to keep global markets on edge, with uncertainty around energy supply and regional stability weighing on investor sentiment. The situation has led to increased volatility across asset classes, with investors remaining cautious amid the evolving developments.

Interestingly, amid the broader market weakness, the sugar sector showed resilience, standing out as one of the few pockets of strength despite ongoing global uncertainties. When crude oil becomes expensive, the demand for alternative fuels like ethanol tends to rise. Since ethanol is primarily produced from sugarcane and its byproducts, sugar companies are seen as key beneficiaries of this shift.

Market participants believe that higher oil prices could accelerate demand for ethanol blending, which has led to renewed investor interest in sugar stocks. India has been actively promoting ethanol blending to reduce dependence on crude imports, lower emissions, and support the agricultural sector.

At the same time, the petroleum industry is encouraging broader adoption of ethanol, including its potential use as a clean cooking fuel, as part of efforts to further reduce reliance on imported LPG and expand the role of biofuels in India’s energy mix. Against this backdrop, several ethanol-focused stocks are emerging as key beneficiaries of India’s policy push and evolving global energy dynamics.

Godavari Biorefineries Limited

Godavari Biorefineries Limited (GBL) is one of the largest producers of ethanol and a pioneer in manufacturing bio-based specialty chemicals in India. Its diversified product portfolio comprises bio-based chemicals, sugar, rectified spirits, ethanol, other grades of alcohol and power. It is the only company in India to have such a vast portfolio of bio-based products.

As of Q3 FY26, the company has been making steady progress in its ethanol business, focusing on both capacity expansion and improved utilisation levels. It is also diversifying its feedstock base by adding grain and maize-based inputs, which enhances flexibility in production.

A 200 KLPD fungible grain/maize distillery is expected to be commissioned in Q1 FY27, which will add around 60 million litres of ethanol capacity annually. These initiatives are aimed at improving operational efficiency while supporting India’s broader ethanol blending programme.

In 9M FY26, the company’s revenue mix showed a balanced contribution across segments, with Sugar & Cogeneration accounting for 37 percent of total revenue. Ethanol contributed 31 percent, while bio-based chemicals made up 30 percent.

Gulshan Polyols Limited

The business portfolio of Gulshan Polyols Limited covers starch, starch sugars, calcium carbonate, alcohol & ethanol business, agro based animal feed & on-site PCC plants with production facilities at Muzaffarnagar (UP), Bharuch (Gujarat), Dhaula Kuan (Himachal Pradesh), Abu Road (Rajasthan), Patiala (Punjab), Tribeni (West Bengal), Amlai & Borgaon (MP) and Goalpara (Assam). 

The company is India’s leading manufacturer of ethanol/bio-fuel, grain and mineral-based speciality products, with a 60 KLPD Ethanol & Distillery facility in Madhya Pradesh, along with a larger 500 KLPD plant also located in Madhya Pradesh. Additionally, it has a 250 KLPD facility in Assam, highlighting its geographic diversification and strong production capabilities in the ethanol segment.

EID Parry (India) Limited

Founded in 1788, EID Parry Limited, a part of the Murugappa Group, operates across the sugar & biofuel and consumer products sectors and is one of India’s largest and most diversified business conglomerates. It holds the distinction of setting up India’s first sugar plant in Nellikuppam in 1842 and has since remained a leader in driving innovation across its various businesses. The contribution of ethanol to the company’s overall revenue has grown from 15 percent in FY19 to 21 percent in FY25, reflecting a steady increase in its share.

EID Parry operates six sugar plants and one independent distillery across South India. These facilities are located in Nellikuppam, Pugalur, and Sivaganga in Tamil Nadu; Sankili in Andhra Pradesh; and Bagalkot, Haliyal, and Ramdurg in Karnataka. Together, these plants possess a total sugarcane crushing capacity of 40,800 TCD, a cogeneration capacity of 140 MW, and a distillery capacity of 582 KLPD. 

Additionally, the company operated specialised manufacturing plants for micro-algal production in Oonaiyur and Saveriyarpuram, Tamil Nadu, as a part of its nutraceuticals business. The company capitalises on its ethanol and Extra Neutral Alcohol (ENA) production capabilities to support the growing green energy sector.

Balrampur Chini Mills Limited 

Balrampur Chini Mills Limited (BCML), one of the largest integrated sugar manufacturing companies in India and India’s second largest private sector sugar company, is engaged in the business of production of sugar, ethanol and co-generated power. In FY24-25, the sugar segment contributed 77.16 percent of the company’s revenues, while the distillery segment accounted for 22.53 percent.

During Q3 FY26, the company reported sugarcane crushing of around 387.6 lakh quintals, marking an increase of about 8.4 percent year-on-year. This growth was mainly supported by the early start of operations at some plants and improved capacity utilisation. At the same time, gross sugar recovery (C-heavy terms) saw a marginal improvement of 8 basis points to 10.63 percent. Despite a reduction in the overall sugarcane cultivation area, the company expects its crushing volumes to remain higher due to additional cane allocation by the state government.

Currently, BCML operates 10 sugar factories across Uttar Pradesh, with a combined sugarcane crushing capacity of 80,000 tonnes per day (TCD). Alongside this, the company has distillery operations with a capacity of 1,050 kilolitres per day (KLPD) and cogeneration power capacity of 175.7 MW (saleable). In addition to its existing operations, the company is also working on setting up India’s first Poly Lactic Acid (PLA) plant with a capacity of 80,000 tonnes per annum, which could open up opportunities in biodegradable materials.

BCML first entered the industrial alcohol and ethanol segment in 1995 with the commissioning of its initial distillery. Since then, the company has steadily expanded its distillery operations, converting molasses into ethanol to cater to the growing demand from oil marketing companies while also strengthening its profitability and cash flows.

At present, the company operates five distilleries located at Balrampur, Babhnan, Mankapur, Gularia, and Maizapur, with a combined ethanol production capacity of 1,050 KLPD. The plants are capable of producing ethanol from multiple feedstocks, including B-heavy molasses, C-heavy molasses, sugarcane juice or syrup, and grains. Over time, ethanol has emerged as a central pillar of the company’s overall business strategy.

BCML has also significantly expanded its ethanol capabilities over the past few years. Between 2018 and 2023, the company invested around Rs. 700 crore, which helped triple its distillery capacity. The plants have been designed with flexible feedstock capabilities, allowing the company to operate efficiently and remain eligible for various government tenders.

For FY26, the company expects ethanol sales to reach around 26–27 crore litres, with the production mix estimated to be 65 percent from B-heavy molasses, 25 percent from C-heavy molasses, and 10 percent from syrup. However, recent policy decisions have created challenges for the profitability of the ethanol segment.

To ensure operations continue during the sugar off-season, the company also produces ethanol using grain-based feedstocks. Even here, certain challenges remain. For example, despite having the capacity to produce around 5 crore litres of maize-based ethanol, the government accepted tenders for only about 3.15 crore litres. Additionally, the profitability of this route is closely tied to fluctuations in maize prices, which can impact margins.

Praj Industries Limited 

Praj Industries Limited (PIL) is an industrial biotechnology and engineering company, with a diverse portfolio comprising bio-energy solutions, critical process equipment & modularisation, breweries, zero liquid discharge systems and high purity water systems.

The company holds around 10 percent of the global ethanol production market share, and its operations are broadly divided into three major revenue-generating segments: Bio Energy, which contributes about 71 percent of revenue, followed by Engineering at 18 percent, and High Purity Solutions, which accounts for the remaining 11 percent.

Among these, Bio Energy remains the company’s core business. The segment focuses on providing end-to-end solutions for first-generation (1G) and second-generation (2G) ethanol plants, along with Compressed Bio-Gas (CBG) projects. In addition to conventional biofuels, the company is also working on next-generation “Future Fuels”, including Sustainable Aviation Fuel (SAF), marine biofuels, and bio-hydrogen, with the long-term goal of supporting carbon-neutral transportation solutions.

On the global front, the company has partnered with Sweden-based Sekab to deploy its Celluniti technology, which enables the conversion of forest residues such as softwood into ethanol. This solution is primarily targeted at the European market, where demand for advanced biofuels continues to grow. The company is also helping existing ethanol plants enhance their profitability by installing specialised modules that enable the extraction of high-value co-products.

Meanwhile, the company’s ‘Grain-to-Ethanol’ technology is gaining increasing traction in international markets. In Brazil, for instance, it is supporting the industry in adopting a dual-feed ethanol production model, where maize is used alongside traditional sugarcane as feedstock. Beyond Brazil, the company is also expanding its low-carbon ethanol footprint in the United States and has secured orders for new ethanol plants in Paraguay, Colombia, Argentina, and parts of East Africa, strengthening its global presence in the biofuels sector.

Triveni Engineering and Industries Limited 

Triveni Engineering and Industries Limited is one of the largest integrated sugar & ethanol manufacturers & engineered-to-order turbo gearbox manufacturers in the country, and a leading player in the water and wastewater management business. During Q3 FY26, ethanol constituted 92 percent of alcohol sales, compared to 89 percent in Q3 FY25.

The company operates a network of advanced distilleries across Uttar Pradesh, including two facilities in Muzaffarnagar (MZN) along with plants in Sabitgarh (SBT), Milak Narayanpur (MNP), Rani Nangal (RNG), and Shamli. These facilities are capable of producing a range of products such as ethanol, Extra Neutral Alcohol (ENA), Rectified Spirit (RS), and Denatured Spirit (SDS). To maintain operational flexibility, the company uses a combination of sugarcane-based and grain-based feedstocks for its distillery operations.

The company has also expanded its presence in the sugar and ethanol segment through strategic acquisitions. On 11th March 2024, Triveni acquired a 25.43 percent equity stake in Sir Shadi Lal Enterprises Limited (SSEL). This was followed by an additional acquisition of 36.34 percent stake on 20th June 2024, taking the total shareholding to a controlling level and making SSEL a subsidiary of the company. SSEL operates two manufacturing units in Uttar Pradesh and is engaged in the production of sugar and ethanol/alcohol, further strengthening Triveni’s footprint in the sector.

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