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Supporters holding flags of ruling Congress party leave after attending an election campaign rally by Rahul Gandhi at Hardoi district in Uttar Pradesh January 28, 2012. REUTERS/Adnan Abidi/Files

Weakened Congress wondering if early elections will help

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Sugar stocks fall after UP raises crop prices

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A worker spreads sugar inside a sugar factory at Sanyan village in Gujarat April 23, 2012. REUTERS/Amit Dave/Files

A worker spreads sugar inside a sugar factory at Sanyan village in Gujarat April 23, 2012.

Credit: Reuters/Amit Dave/Files

Mon Dec 10, 2012 12:52pm IST

Reuters Market Eye - Shares in Uttar Pradesh-based sugar companies were trading lower after the state raised the price at which sugar mills buy the new season crop by up to 16 per cent to 290 rupees per 100 kg.

Morgan Stanley said in a note the hike in the price of cane in the current sugar season by 2,920 rupees per tonne is much higher than expectations of a 2,820 rupees pertonne hike.

"Profitability of north Indian millers is likely to be dented," it added.

The hike in procurement price will increase the cost of production, which, at around 35,000 rupees per tonne, is comparable to the current spot sugar prices, implying "no profits for the sugar division at the operating level," Morgan Stanley added.

Shares of Balrampur Chini (BACH.NS) fell 5 percent and Bajaj Hindusthan (BJHN.NS) was down 1.25 percent, while Shree Renuka Sugars (SRES.NS) fell 2.1 percent.
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