Share of Shree Renuka Sugars Limited hit a 5 per cent upper circuit at Rs 35.75 in early trade on BSE today after the company announced that it will invest Rs 450 crore to expand its ethanol capacity.
The company informed that its board has approved expanding production capacity by 430-kilo litre per day to 1,400-kilo litre per day.
In February, the board had approved a capacity expansion of ethanol from 720-kilo litre per day to 970-kilo litre per day.
The stock opened 5 per cent higher at Rs 35.75 against the previous close of Rs 34.05 on BSE. Market cap of the firm rose to Rs 7,609.35 crore.
The sugar stock has gained 252 per cent in the last 12 months and risen 194 per cent since the beginning of this year. It stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages.
“Considering the huge untapped demand for ethanol due to the policies of Government of India on ethanol blending, the Board of Directors of the company approved further capacity expansion for ethanol production from 970-kilo litre per day to 1,400-kilo litre per day,” the company said.
Shree Renuka reported a net loss of Rs 44 crore for the quarter ended March 2021, as compared to a loss of Rs 146 crores in the same quarter a year ago.
Net sales declined 8 per cent to Rs 1,320.40 crore for the quarter ended March 2021 compared to Rs 1,431.90 crore in the year-ago period.
For FY21, the company posted a net loss of Rs 114.70 crore against Rs 2,099.20 crore in the previous year. Sales rose to Rs 5,648.50 crore in the fourth quarter of last fiscal from Rs 4,881.20 crore in the corresponding period of the previous year, the company said in a regulatory filing.
During the year, the company has got a waiver in respect of interest accrued on trade payables for purchase of raw sugar and advances for sale of white sugar received from its parent Company Wilmar Sugar Holding PTE Ltd and its fellow subsidiary Wilmar Sugar PTE Ltd amounting to Rs 65.9 crore.
The company has also received Rs 185.0 crore as proceeds of preferential issue of 211,670,481 equity shares to Wilmar Sugar Holdings Pte Ltd (Promoter Company) at a cash price of Rs. 8.74 per share.
Sugar stocks have been on a roll for the past few months. Recently, Prime Minister Narendra Modi said that the target date for achieving 20 per cent ethanol-blending with petrol has been advanced by five years to 2025 to cut pollution and reduce import dependence.
Ethanol extracted from sugarcane as well as damaged food grains such as wheat and broken rice and agriculture waste is less polluting and its use also provides farmers with an alternate source of income.
Speaking at the launch of the ethanol road map on the occasion of World Environment Day, Modi said that the target for mixing 20 per cent ethanol in petrol has been brought forward from 2030 to 2025.
Shree Renuka Sugars operates eleven mills globally (four in Centre-South Brazil and seven in India) with integrated ethanol and power co-generation capacity. The company also has two large port-based sugar refineries in India.