Sweet Prospects: Sugar Mills Eye Moderate Growth in FY26

Integrated sugar mills are projected to experience moderate revenue growth of 5-8% in FY26 due to improved sugarcane availability and stable prices. However, margins may stabilize due to rising cane costs. Ethanol prices stay steady, impacting margins slightly. Global and domestic sugar supply remain satisfactory, securing industry stability.

Integrated sugar mills are set to witness moderate revenue growth of 5-8% in the fiscal year ending 2026, propelled by improved sugarcane availability and stable sugar prices according to a report released on Friday by Icra. Nevertheless, margins are expected to remain stable due to increased sugarcane prices against largely stagnant ethanol prices.

The report highlighted that the Fair and Remunerative Price for sugarcane in the Sugar Year 2026 has been raised by Rs 15 to Rs 355 per quintal. Icra anticipates operating margins for these mills will remain between 10-10.5%, compared to 9.6% in the previous year.

Also, due to profit accretion and repaid distillery loans, borrowing is expected to moderate, thus enhancing the capital structure. Despite lower international sugar prices, domestic demand and production remain balanced, with a net sugar production of 29.3 million metric tonnes projected after accounting for ethanol production.