Indian Sugar Sector’s Operating Margins To Moderate In FY25: Report
Indian sugar sector operating margins are expected to dip to 9-10% in FY25 from 12% in FY24, per ICRA. Revenues may grow 8-10% due to increased sugar and distillery sales in H2FY25. Gross sugar production is projected at 33.3 million MT in SY25, with net production at 29.3 million MT after ethanol diversion. Sugar prices remain subdued.
On account of a weak performance in the first half of the current financial year 2025 (FY25), the operating margins of the Indian sugar sector are expected to moderate in the current fiscal. A report by Icra has stated that operating profits in FY25 are likely to show sharp dip and remain in the range of 9 to 10 per cent for the sample set against 12 per cent in the previous year.
The report added that the revenues of Icra’s sample set are expected to show growth of around 8 to 10 per cent in FY25 supported by higher sugar and distillery sales volumes mainly in H2FY25. With higher sugar sales volumes along with higher diversion expected towards distilleries, the closing inventory is likely to witness decline.
As far as the sugar production is concerned, for sugar year (SY, from 1 October to 30 September), it stood at 6.14 million MT till 15 December 2024, compared to 7.41 million MT in the corresponding period of the last year. The Indian Sugar Mills Association (ISMA) has projected gross sugar production of 33.3 million MT in SY25 against 34 million MT in SY24.
The net sugar production is estimated to decline to 29.3 million MT after taking the ethanol diversion of four million MT in consideration. The report added that the closing sugar stock levels, after domestic consumption, are expected to remain moderately high at around 9.4 million MT as on 30 September 2025.
Due to ongoing crushing season and ample sugar supply, the domestic sugar prices (Uttar Pradesh) moderated to Rs 36 per kilogram in December 2024 from Rs 37 to 38 per kg in the previous month, as per the report. The domestic sugar prices in the three months (3M) of SY25 have remained lower than the previous season.
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Source : Business World
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