Sugar output seen growing 15% in 2026 season on good monsoons
Gross sugar production is likely to rise 15% in the 2026 sugar season to about 35 million tonne, aided by above average monsoons, boosting cane acreage and yields in key sugar producing states such as Maharashtra and Karnataka, says a report.
The growth is expected to ease tightness in domestic supply and has the potential to boost ethanol diversion and revive exports with appropriate policy support. This would offer sugar mills some relief from the challenges of high cane cost, subdued ethanol prices and muted exports that compressed their operating profitability by 200 bps to 8.7-9% in fiscal 2025, Crisil Ratings said in a report Friday.
In fiscal 2026, with improved supplies and potentially higher diversion of sugar for blending ethanol with gasoline, the operating margin of sugar mills is likely to recover to about 9-9.5%. This should support credit profiles of sugar players, which saw some pressure last fiscal, said the report, based on 54 sugar mills with total revenue of Rs 70,000 crore in fiscal 2025.
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