Top Sugar Penny Stocks in India: Sugar has long been considered a cyclical industry in India. However, in the past few years, the government’s push for ethanol blending and the export quotas raise has turned the fortunes of the companies in the sector. Being a commodity, the smallest companies are well-positioned as much as their larger peers. In this article, we’ll look at such small sugar manufacturers, aka, top penny sugar stocks in India.
Top Sugar Penny Stocks in India
The sugar sector is a capital-intensive industry involving huge leverage. Many producers have to keep significant debt in their capital structure. Additionally, the manufacturers enjoy an entry barrier because of their local brand awareness and sourcing ties.
Thus, with operational and financial leverage involved, sugar stocks become all the way more attractive with record sugar cane production, exports increase, and ethanol blending targets.
These leverage metrics are more pronounced in small companies, the holy grail of multi-bagger returns. Therefore, we take a closer look at the top sugar penny stocks in India. So without further ado, let us jump in.
Top Sugar Penny Stocks #1 – Indian Sucrose
|CMP||₹63||Market Cap (Cr.)||₹109|
|Promoter Holding||64.5%||Book Value||₹87.8|
|Debt to Equity||1.61||Price to Book Value||0.71|
|Net Profit Margin||8.4%||Operating Profit Margin||13.3%|
Indian Sucrose Ltd. (ISL) is a Punjab-based sugar manufacturing company engaged in the production of sugar, molasses, bagasse & other products and captive power generation. It operates one plant in the Hoshiarpur district of Punjab.
ISL was started in 1990. As of the present date, the company has an installed capacity of 9000 tonnes of cane per day (TCD) and a co-generation power capacity of 30 MW.
Sugar production accounted for 90% of the total operating income of Indian Sucrose in FY22. Its net profit has steadily increased from Rs 19 crore in FY20 to Rs 40 crore in FY22 as the operating margins improved during the period.
ISL presently trades an attractive price-to-earnings ratio of 4.59 and a price-to-book value of 0.71. The stock is highly leveraged with a debt-to-equity ratio of 1.61. This translates into a wide gap in the return ratios with RoCE at 18.4% and RoE at 28.4%.
Top Sugar Penny Stocks #2 – KM Sugar Mills
|CMP||₹30||Market Cap (Cr.)||₹279|
|Promoter Holding||56.5%||Book Value||₹27.9|
|Debt to Equity||0.88||Price to Book Value||1.09|
|Net Profit Margin||7.59%||Operating Profit Margin||13.40%|
Located in Faizabad, Uttar Pradesh, KM Sugar Mills is engaged in the business of producing sugar, distillery products, and power. Its sugar plant manufacturing capacity stands at 9000 TCD. Additionally, its distillery plant and co-generation power installed capacity are 45-KPD and 25 MW respectively.
Its bagasse-based co-generation energy plant is connected to the grid. Thus, the company supplies electricity to the Uttar Pradesh Power Corporation.
Like Indian Sucrose, sugar production for KM Sugar contributed to a majority of 89% of the company’s operating sales. This was followed by the distillery division’s share of 8%.
KM Sugar Mills reported a net profit of Rs 41 crore in FY22 on sales of Rs 548 crore. The net profit has increased by 128% in two years from Rs 18 crore only in FY10.
Top Sugar Penny Stocks #3 – Vishwaraj Sugar Industries
|CMP||₹18||Market Cap (Cr.)||₹337|
|Promoter Holding||33.7%||Book Value||₹14.3|
|Debt to Equity||0.89||Price to Book Value||1.29|
|Net Profit Margin||12.9%||Operating Profit Margin||20.0%|
Incorporated in 1995, Vishwaraj Sugar Industries Ltd. is a small-cap producer of sugar, molasses, and captive power. Its manufacturing facility is located in Belgaum, Karnataka which has been categorized as a high sugar recovery zone by the Indian government.
The company also manufactures rectified spirit, ENA, ethanol, vinegar, press mud, and compost. Its present installed sugarcane crushing capacity stands at 10,500 TCD. It supplies its sugar for domestic as well as industrial consumption (or manufacturing biscuits, confectionery, and beverages).
The sugar segment brought 58% of Vishwaraj Sugar’s total operating revenue of Rs 468 crore in FY22. Unlike the previous two stocks we covered above, its distillery segment contributed to a major 32% of the operating income.
The sugar penny stock currently trades at a lucrative P/E ratio of 6.5. Its debt-to-equity ratio stands at 0.89. It has a relatively lower promoter shareholding of 33.7%.
Top Sugar Penny Stocks #4 – Kothari Sugars & Chemicals
|CMP||₹44||Market Cap (Cr.)||₹366|
|Promoter Holding||73.5%||Book Value||₹29.6|
|Debt to Equity||0.23||Price to Book Value||1.48|
|Net Profit Margin||7.8%||Operating Profit Margin||11.8%|
Part of the HC Kothari Group, Kothari Sugars and Chemicals was set up as a sugar mill in 1961 in Trichy, Tamil Nadu. Fast forward to today, the company runs two sugar manufacturing plants and also produces captive power, industrial alcohol, and bio-compost.
In FY22, Kothari Sugars earned operating revenue of Rs 422 crore. Sugar production accounted for a majority of 62% of the sales of this sugar penny stock. Co-generation of power and distillery products contributed to 26% and 25% of the income respectively.
The revenues of the company have steadily increased from Rs 287 crore in FY18 to Rs 422 crore in FY22 at a CAGR of 8.01% every year. It reported a net profit of Rs 34 crore in the recent financial year.
The shares of Kothari Sugars and Chemicals presently trade at a price-to-earnings ratio of 7.9 and a price-to-book value ratio of 1.48. Unlike other leveraged sugar manufacturers in this list, it has a low debt with a debt-to-equity ratio of 0.23.
Top Sugar Penny Stocks #5 – Piccadily Agro Industries
|CMP||₹44||Market Cap (Cr.)||₹411|
|Promoter Holding||71%||Book Value||₹23|
|Debt to Equity||0.59||Price to Book Value||1.90|
|Net Profit Margin||5.1%||Operating Profit Margin||12.1%|
Piccadilly Agro Industries Ltd. (PAIL) is a Haryana-based small-cap manufacturer of white crystal sugar with an installed capacity of 5,000 TCD. Additionally, it has a co-generation power capacity of 6 MW and a distillery capacity of 60 KLPD.
The company was incorporated in 1994 and presently runs as a group with its 3 associate companies. Its two segments: sugar and distillery contributed to 54% and 46% of the total operating revenue in FY22.
The top line of this sugar penny stock has consistently increased from Rs 334 crore in FY18 to Rs 572 crore in FY22. In the recent fiscal, it earned a net profit of Rs 29 crore.
Piccadilly Agro has a high promoter holding of 71%. Its stock presently trades at a P/E ratio of 21.7 giving the company a market cap of Rs 411 crore.
List of Top Sugar Penny Stocks in India
The table below lists all the sugar penny stocks we covered above.
|Company Name||CMP (Rs)||Market Cap (Rs Cr)||P/E||FY22 Sales (Rs Cr)|
|KM Sugar Mills||30||279||14.6||548|
|Vishwaraj Sugar Industries||18||337||6.5||467|
|Kothari Sugars & Chemicals||44||366||7.9||422|
|Piccadily Agro Industries||44||411||21.7||572|
We are now at the end of our article on the top sugar penny stocks in India. We observed that the revenue sources of the larger penny stocks are more diversified than the smallest companies. Further, they have comparatively lower debt-to-equity ratios. However, investors must exercise due diligence before investing in penny stocks.
Many are part of pump-and-dump strategies. Or their liquidity evaporates at the first sign of trouble. How comfortable are you with penny stocks? Which penny stocks would you like us to cover next? Feel free to comment below.
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Vikalp Mishra is a commerce graduate from the University of Delhi. He likes to write on finance, money and business. He is a voracious reader with a genuine interest in investing. Drop him a mail at firstname.lastname@example.org.
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