Ethanol Edge: Why Is India’s Green Fuel Sweetening Sugar Stocks? Best Ethanol Stocks in India 2025
If you keep a sharp eye on the sugar companies, it is so easy to witness a huge shift progressing already. The surprising factor is that a larger part of these venture earnings comes from ethanol rather than sugar sales.
As per a report from the Press Information Bureau, the average rate of ethanol blending in petrol increased to 17.98% in February 2025. The same number was 14.60% in the year 2024. Moreover, the total ethanol procurement reached 4.41 billion litres in 23-24, which was 12 times higher than in the past decade.
With ethanol having stable prices and assured buyers, the market changes quickly with any related event or news.
Why Ethanol Demand Is Rising in India
Since India is actively trying to achieve E20 (20% ethanol mix in petrol), the demand for the same is on the rise.
All the big oil companies have been making pre-commitments to buy more ethanol for the upcoming year. Such trends are giving a signal that the growth in the ethanol market seems to be true.
How Government Rules Shape Ethanol Output
| Update Type | Specific Change | Impact on Sugar Companies |
| Juice-Based Ethanol | Limits placed on juice diversion | More cane moves toward B-heavy molasses |
| B-heavy Ethanol Price | Price increased for 2024–25 | Higher realisation per litre |
| OMC Procurement | Higher allocation for B-heavy and grain ethanol | More assured offtake |
| Blending Target | Push toward 20 percent blending | Long-term demand visibility |
Why Ethanol Strengthens Sugar Company Performance
For Sugar mills, ethanol brings better and more reliable business. Since the ethanol prices are pre-decided by the government, the OMCs are confirmed buyers with timely payments.
On the contrary, the sugar market has been witnessing swing pricing with dependency on global supply and export conditions. The fixed and predictable income from ethanol allows these companies to maintain their money flow with strong financials.
How B-heavy Molasses Boosts Ethanol Revenue
Sugar companies choose B-heavy molasses (a thick intermediate product from processing sugarcane) for ethanol manufacture because of heavy profits. With the latest price rise for B-heavy ethanol, the approach has been more rewarding than it has ever been.
When a sugar mill handles both sugar and ethanol production, the major share of sugarcane is used for B-heavy molasses. It increases their profit margin from the amount of sugarcane being used in the process.
Distillery Expansions Expected in 2025
To cater to the high demand for ethanol next year, the majority of sugar companies are constantly building and expanding their distilleries (production facilities). Some of the key companies heavily investing in this expansion are
| Company | Expected Capacity Change (Approx.) | Key Focus Area |
| Balrampur Chini | Moving beyond 350+ KLPD | More B-heavy output |
| Triveni Engineering | Expansion across multiple units | Higher ethanol mix |
| Dwarikesh Sugar | New B-heavy-focused plant | Better diversion economics |
| EID Parry | Added capacity in South India | Higher supply to OMCs |
Market Reaction to Ethanol-Linked Announcements
Sugar stocks often move up quickly after every government change announcement, like ethanol price change or blending-related updates.
For example, the recent price increase in B-heavy ethanol led to an immediate rise in the stocks of Balrampur Chini and Triveni Engineering.
Similarly, with OMCs (Oil Marketing Companies) announcing their broader plans to purchase ethanol for the 24-25 season, stock prices of Dhampur Sugar and Dwarikesh Sugar went above.
Best Ethanol Stocks in India 2025
The major benefit in the stock market is for the sugar companies that are involved in the production of sugar mills and ethanol distilleries. These companies can direct more sugarcane to profitable B-heavy ethanol.
- Uttam Sugar Mills
- Avadh Sugar & Energy
- Andhra Sugars
- Rana Sugars
- Kothari Sugars & Chemicals
- Bajaj Hindusthan Sugar
Conclusion
Hence, the business of ethanol production is the major play behind the growth and profits for Indian sugar companies. The higher prices of B-heavy ethanol assure that there are going to be large purchases from the big oil ventures.
Further, with more new ethanol production facilities opening in 2025, ethanol will be the key player in deciding the profit margin and stock price movement. If you’re a trader or enthusiast with ethanol news, keep reading StockYaari to stay updated with such insightful details.
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This analysis is for informational purposes only. Please consult a SEBI-registered financial advisor before investing.
– Chandan Pathak
Equity Research Analyst, StockYaari