Balrampur Chini can see 30% upside in two years, says Elara Securities’ Prashant Biyani

Shares of Balrampur Chini Mills are positioned for a 30% upside over the next one and a half to two years, according to Prashant Biyani, Vice President of Institutional Equity at Elara Securities. Despite the stock surging 60% since the start of the year and 79% from its 52-week low, Biyani recommends buying it as a structural three-to-five-year growth story, driven by rising sugar prices and a new polylactic acid (PLA) project launching in December.

The bullish outlook for the broader sector is underpinned by a looming supply deficit in India. "The main thesis is that India right now is witnessing some sort of a shortage in sugar supply, not only in the current situation. I think this shortage may continue for at least a year or so," Biyani said. Production estimates for the next two years have been trimmed due to adverse weather conditions, and rebuilding normal inventory levels will take time unless the country resorts to imports, which would require higher domestic prices to be viable.

Raw sugar prices are currently hovering between ₹51 and ₹55, depending on the region, which is 15% to 20% higher on a year-on-year basis. However, Biyani expects prices to moderate month-on-month as the new crushing season increases availability, remaining contained below ₹50 on average until February.

The upcoming state elections in Uttar Pradesh are also a major factor keeping prices in check. While the government might raise the state advised price (SAP) for cane, mills can absorb the cost without hurting profitability due to remunerative sugar prices. "Beyond 50 on a sustainable basis, we can see after February only," Biyani noted, adding that any sudden price spikes would likely trigger government intervention to rein in costs.

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The industry is currently at the start of a new cyclical uptrend, with strong earnings visibility for the coming quarters. After a flat April-June quarter of 2026 (Q1FY27) where volumes dipped slightly, Biyani projects a 12% volume growth—matching quota sales growth—and a 14% to 15% increase in price realisations for the sector in the July-September quarter of 2026 (Q2FY27). This volume and realisation growth run rate is expected to repeat in the October-December quarter of 2026 (Q3FY27), setting the stage for sugar mills to report robust financial numbers.

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