India is targeting to achieve net-zero carbon emissions by 2070. To meet this, the government has rolled out a series of policies for the efficient use of energy across various economic sectors.
Ethanol Blending Programme is one such program, under which the government is aiming to achieve 20% blending of ethanol with petrol (E20) by 2025.
It is a government initiative aimed at blending ethanol, a biofuel derived from sugarcane, grains, and other feedstocks, with gasoline.
The program's primary objectives are to promote the use of renewable fuels, reduce greenhouse gas emissions, support the country's agricultural sector, and enhance energy security.
This E20 plan has put the spotlight on companies such as sugar manufacturers and producers of alcohol spirits, who are also involved in the production of ethanol. The government’s focus on green growth through programs such as E20 has made investors interested in ethanol stocks given their potential.
Some of the best ethanol stocks in India 2023:
Shree Renuka Sugar: It is one of the largest sugar producers in the world. Shree Renuka Sugars has eleven mills globally, of which four are in Centre-South Brazil and the remaining seven in India, with integrated ethanol and power co-generation capacity. It manufactures fuel-grade ethanol that can be blended with petrol and has a distillery capacity of 930-kilo litre per day (klpd).
E.I.D Parry (India): This Chennai-based company is part of the Murugappa Group and is one of the leading sugar manufacturers in India but also has operations in the nutraceuticals space. It has charted out plans to spend Rs 268 crore in FY24 to augment ethanol production capacity.
Triveni Engineering: It is one of the largest integrated sugar manufacturers in India. It has four well-equipped ultra-modern distilleries and produces potable alcohol as well as fuel-grade Ethanol. The company is also expanding its distillation capacity by setting up two new dual feedstock distilleries. The commercial production from the new distilleries is expected to commence in the October-December quarter, making Triveni Engineering among the best ethanol stocks to buy in 2023.
Dhampur Sugar Mills: It is a manufacturer of refined and raw sugar, bio-fuels, biomass-based renewable power, and other related products. It is one of the largest suppliers of fuel ethanol to OMCs across India. Given the increasing demand from oil marketing companies, investors scouting for the best ethanol stocks to buy in 2023 may look at this stock.
Globus Spirit: This alcohol-beverage manufacturer is also on the radar of investors looking to buy ethanol stocks. It has nearly three decades of experience and operates integrated plants to facilitate the production of rectified spirits, grain-neutral alcohol, value-priced spirits, and premium spirits. The company plans to set up a 300 klpd ethanol plant in Odisha.
Bajaj Hindustan Sugar, Dwarikesh Sugar Industries, Dalmia Bharat Sugar, Balrampur Chini, and Praj Industries are some of the other ethanol stocks to look out for in 2023.
The focus of government currently seems to be on the benefits of blending in the form of energy self-reliance, reducing import costs, and reducing carbon emissions. It will be important for the stocks of companies in this sector that the government does not deviate from its blending target and has a roadmap in place regarding ethanol once the 20 percent blending target is achieved.
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