The central government has ordered oil companies to mix ethanol in petrol in order to cut emissions and reduce the expenditure on oil imports. A target of 20 percent ethanol blending in petrol has been set by the year 2025.
Prime Minister Modi said on the occasion of World Environment Day that the target of 20 percent ethanol-blended petrol has been advanced by 5 years to 2025 to reduce pollution and reduce dependence on imports. Earlier the target was to achieve this by 2030.
20% ethanol in petrol
The Modi government has ordered oil companies to mix ethanol in petrol to cut carbon emissions and reduce the cost of oil imports. A target of 20 percent ethanol blending in petrol has been set by the year 2025. Stock market experts say that due to the government’s program to mix ethanol in petrol, the business performance of sugar companies will improve.
Improve performance of sugar companies
Shares of companies running sugar mills have been performing well in the stock market for the past few months. The market is expecting the industry to improve with the government’s decision to increase ethanol blending with export subsidy. Investing in stocks of companies like Dalmia Bharat Sugar, Triveni Engineering and Balrampur Chini can be profitable with the help of the central government’s ethanol blending program, said Sanjay Manyal, Equity Research Analyst, ICICI Securities.
Sanjay Manyal’s Hope
Sanjay has said that it is certain that due to the compulsion to mix ethanol in petrol, the profitability and valuation of sugar companies will increase. In the next two-three years, the profits of sugar companies are likely to increase by two-three times. For the last two-three years, due to the blending of ethanol in petrol, the stocks of sugar companies are seeing improvement. Due to the help given for exports, the situation of sugar companies has also improved. The ethanol blending program is expected to have a long-term impact on the stocks of sugar companies.
Dalmia Bharat Sugar Investments
Analysts say that this move of the government can improve the condition of sugar mills. Dalmia Bharat Sugar and Industries is rapidly expanding its ethanol manufacturing capacity, due to which it is expected to be the biggest beneficiary of the government’s move. In the next three-four years, the annual earnings of companies can grow by up to 25 percent. Dalmia Bharat Sugar plans to double its ethanol production capacity by March 2022. Because of this, he can get the most benefit from the government’s ethanol blending program. Accordingly, investors investing in Dalmia Bharat Sugar can also make good gains.
