Sugar Fest

Index : 2,578 | 1Yr : +57.18% | 1Mo : -6.51%

Category : Sectoral Trackers

Min Investment : 2,281

Sharpe Volatility Trend

India has the largest domestic market for sugar and it is the second largest agro based industry in India. Unlike other major sugar producing nations in the world, it does not rely on exports due to the large domestic market thereby being insulated by the volatile international prices. However, there is a further opportunity for cyclicality management to even out the volatile demand supply factors in the industry. The sector is regulated across the value chain & due to the high fixed prices of cane and volatile sugar prices, it has struggled to deliver great returns.

With the emergence of ethanol used as fuel, the sector has new horizons to explore in carbon free power production. The price structure does not make sugar competitive in export markets unless there is a large surplus in sugarcane production which can be offloaded to other countries.

It is a high volume & low margin business. Growth in business is expected by increase in year on year volumes than by significant boost in margins. Invest in well managed sugar companies in India through this theme.

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