Sugar industry is highly cyclical and for such cyclical industries, the good time to invest is when the industry is going through a low phase.
While going through Insider trades data, I came across Ugar Sugar Works. The stock is down from highs of 130 + to around current levels of 45. Also, since Dec’24, promoters have bought shares worth Rs 11.60 crore.
Question is, why is the Promoter buying aggressively when the stock is down 60% + from peak?
Today, we came across some interesting data regarding Sugar Industry and have shared below.
Before that: We are evaluating a few stocks for “Insider Bets“ subscription and planning to release a new stock recommendation in next few days for members.
Coming back to Sugar sector or any highly cyclical sector in general, it’s important to catch the cycle right. If you invest when the sector is doing well and the performance soon peaks out, you could get trapped in subsequent down cycle and long period of losses or no returns.
However, if you are able to invest during lows and the cycle turns around for good, the returns can be substantial.
Today, I came across some interesting data regarding Sugar Season Year 25 (SSY25) vs Sugar Season Year 24 (SSY24).
- No. of operational mills for SSY25 are down to 113 against 204 for SSY24
- 11% lower cane crushed in SSY25 vs SSY24
- 18% lower sugar production in SSY25 vs SSY24
The above data indicates the pain the industry is going through. There was probably lower availability of cane which resulted in many mills shutting down and overall lower production of sugar.
Question is, can lower production of sugar impact demand-supply mismatch and can it result in higher sugar prices which will eventually benefit the companies?
I think, in the light of the current downcycle, it will be important to watch out for this sector for potential contra bets.
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Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.
Ekansh Mittal
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