Sugar Companies’ Revenue Set to Rise Next Season

18-Jul-2025 03:41 PM

Mumbai. A leading rating agency has projected a 6 to 8 percent increase in the revenue of sugar-producing companies during the 2025-26 marketing season. However, due to stable ethanol prices, the operating margins of these companies may remain limited.

The agency attributes the expected growth to above-average monsoon rainfall and an increase in sugarcane cultivation in Maharashtra and Karnataka, which is likely to boost domestic sugar production by 15 percent compared to the 2024-25 season.

Sales volumes of sugar are expected to rise in 2025-26, and prices are likely to remain strong. Additionally, ethanol production in distilleries is expected to improve, which may help increase the overall income of sugar mills. However, if ethanol prices do not rise, only a modest increase in operating margins is anticipated. The rating agency maintains a stable outlook for the sugar sector.

The gross sugar production is projected to rise from 296 lakh tonnes in 2024-25 to 340 lakh tonnes in 2025-26. Of this, around 40 lakh tonnes may be diverted for ethanol production, leaving 300 lakh tonnes available for food consumption—38 lakh tonnes more than the 262 lakh tonnes in the previous season.

Domestic sugar demand is estimated to remain around 290 lakh tonnes. Current sugar prices in the domestic market range from Rs 3900 to 4100 per quintal and are expected to remain strong at least until the next season begins.

As of 30 September 2025, the closing surplus stock is expected to be around 52 lakh tonnes, significantly lower than the 80 lakh tonnes available on 30 September 2024.

This stock is equivalent to two months of consumption. By the end of the next marketing season, the surplus stock is projected to rise to 63 lakh tonnes, enough to cover demand for two and a half months.