Will the Revenues of Sugar Mills in India Rise by 8% in FY26?
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Synopsis
A promising report indicates that sugar mills in India are set to experience an 8% revenue increase in FY26, fueled by favorable monsoon conditions and boosted sugar production. With stable prices and rising ethanol diversion, the sugar sector's future looks bright. Discover how these trends could shape the industry!
Key Takeaways
- Projected 6-8% revenue growth for sugar mills in FY26.
- Expected 15% increase in sugar production to 34.0 million tonnes.
- Stable domestic sugar prices will enhance profitability.
- Closing sugar stock forecasted at 6.3 million MT by September 2026.
- Government’s ethanol blending policy supports the sector.
New Delhi, July 16 (NationPress) A monsoon season that exceeds expectations is projected to enhance sugarcane cultivation in Maharashtra and Karnataka. This, combined with optimistic projections for improved yields in primary sugar-producing states, suggests a remarkable 15% rise in sugar production this year, as indicated by a report published on Wednesday.
ICRA forecasts that the revenues of integrated sugar mills will grow by 6-8% in FY2026, driven by anticipated increases in sales volumes, stable domestic sugar prices, and enhanced distillery outputs.
Nonetheless, the growth in operating profit margins for sugar mills is expected to be modest in FY2026 if ethanol prices do not fluctuate. ICRA’s outlook for the sugar industry remains 'Stable', supported by the projected revenue growth, consistent profitability, and healthy debt coverage ratios, alongside government policy support, including the ethanol blending programme (EBP).
Commenting on anticipated domestic sugar production and pricing, Girishkumar Kadam, senior vice president at ICRA, stated: “ICRA anticipates that gross sugar production will rise to 34.0 million tonnes (MT) in sugar year 2026 from 29.6 million MT in sugar year 2025, aided by an above-normal monsoon and expected improvements in cane acreage and yield in key sugar-producing states.”
After accounting for an estimated 4 million MT diversion to ethanol production, net sugar production is projected to increase to 30.0 million MT in 2026 from 26.2 million MT in 2025. Despite the anticipated increase in ethanol diversion in 2026, the closing sugar stock level is expected to remain manageable, he explained.
In addition, domestic sugar prices, currently ranging between Rs 39-41 per kg, are likely to remain stable until the onset of the next season, thereby bolstering mills’ profitability, he added.
The report predicts that the closing sugar stock will be approximately 5.2 million MT as of September 30, 2025, decreased from 8.0 million MT as of September 30, 2024, which would equate to about 2 months of consumption.
The closing stock is expected to rise to 6.3 million MT (around 2.5 months of consumption) by September 30, 2026, assuming domestic consumption and export quotas remain consistent with SY2025, according to estimates.
“The trend towards ethanol blending has been positive, with the 20% blending target set by the Government of India recently achieved. Moreover, the government is considering the possibility of increasing this target, which will further support distilleries,” Kadam remarked.
Point of View
I emphasize that the anticipated growth in sugar mill revenues reflects a stable and resilient sugar sector in India. With supportive government policies and an encouraging monsoon, stakeholders can expect a robust future. NationPress remains committed to delivering timely and reliable insights into the agricultural landscape.
NationPress
16/07/2025
Frequently Asked Questions
What factors are driving the revenue growth of sugar mills in India?
The expected revenue growth of sugar mills in India is driven by an increase in sugarcane acreage due to favorable monsoon conditions, better yield projections, stable domestic sugar prices, and rising distillery volumes.
How much is sugar production expected to rise in FY26?
Sugar production in India is projected to rise by approximately 15%, reaching around 34.0 million tonnes in FY26, up from 29.6 million tonnes in FY25.
What is the current price range for domestic sugar?
Domestic sugar prices are currently stable, ranging between Rs 39-41 per kg, and are expected to remain firm until the start of the next season.
How does ethanol production impact sugar production?
An estimated 4 million tonnes of sugar is expected to be diverted towards ethanol production, which impacts net sugar availability, although the overall closing sugar stock is expected to remain manageable.
What is the closing sugar stock forecast for 2026?
The closing sugar stock is expected to be around 6.3 million tonnes by September 30, 2026, assuming consumption and export quotas remain unchanged from sugar year 2025.
