Modi 3.0 stock pick: Experts see over 50% upside in this sugar stockin long term. Here’s why
Market experts foresee a promising trajectory for Davangere Sugar Company shares in the wake of Modi 3.0’s commitment to boost ethanol blending in petrol to 20%. With a recent 1:5 stock split and a favorable price point around ₹10, the stock is poised for substantial gains. Analysts predict a potential return of over 50% in the long term, backed by the company’s ethanol blending and sugar business, bolstered by increased ethanol demand and strategic production locations across key sugarcane states. Arihant Capital recommends a ‘buy’ rating, citing strong demand levels and positive momentum indicators, with a target price range of ₹13.20 to ₹15.
Modi 3.0 stock pick: After the formation of Modi Cabinet 2024, market experts are busy finding value picks on Dalal Street as most of the business and economy-related portfolios have been given to the same ministers who held the ministry in Modi 2.0. In this line, stock market experts predict that the Modi 2.0 policies will continue and catch momentum. They said that Modi government is committed to increase ethanol blending in petrol fuel to around 20 percent which is at around 14 percent only. So, sugar companies in the business of ethanol blending are expected to reap the benefits of thie central government vision. In this line, they advised long term investors to look at Davangere Sugar Company shares as they believe that the stock is expected to witness spurt in volume after the recent 1:5 stock split. They said that the stock may give over 50 percent return in the long term, indicating a potentially lucrative investment opportunity.
Trigger from Modi 3.0
Speaking on the reason for being bullish on Davangere Sugar Company shares, Avinash Gorakshkar, a seasoned Head of Research at Profitmart Securities, shared his insights. He emphasized,”Davangere Sugar Company Ltd is in the business of ethanol blending. So, they are expected to reap the dual business of ethanol blending and sugar. As the Modi government is committed to enhancing ethanol use in petrol from the existing 14 percent to around 18 to 20 percent, sugar majors including Davangere Sugar Company may benefit from this Modi government’s vision. As Modi 3.0 government is expected to further push this ethanol blending policy, ethanol blending business is expected to catch momentum in medium to long term. As the stock is available at around ₹10 after 1:5 stock split, we are expecting spurt in trade volume of the stock as well.” He further explained that the demand for ethanol is much higher than the supply, indicating a potential rise in demand for ethanol in the short to medium term, which could lead to an increase in ethanol production by sugar companies.
Davangere Sugar Company share price target
Giving a ‘buy’ tag to Davangere Sugar Company shares, Arihant Capital report said, “Davangere Sugar Company Ltd has Sugarcane crushing capacity of 4,750 TCD, Ethanol product on the capacity of 17.3 mn litres p.a. and 24.45 MW of co-genera on capacity. Government vision of blending 20 percent ethanol in petrol by 2025 from current level of nearly 14 percent will give a boost to ethanol volumes,” adding,”The company’s ethanol production plant’s location allows it access to three major sugarcane producing states UP (35%), Maharashtra (33%) and Karnataka (15%).”
On the suggestion to investors regarding Davangere Sugar Company shares, Arihant Capital report said,”On the daily chart, we are observing that there is strong demand in the range of 9 to 8 level. At present, the momentum indicator RSI is positively poised. Even the RS comparison is making a higher formation. Combining all the above parameters, it is evident that momentum on the upside is likely to continue. Hence, one can BUY the stock at CMP of ₹9.75 with a stop loss of ₹7 for the target of ₹13.20 to ₹15 levels in the next couple of weeks.”
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