Wonder why one ever wish to buy Sugar stocks having their mills in UP?

Buy Sugar stocks of companies having their mills in South.

UP will remain disturbed for the next 3 years. Politics you know.

Sugar mills in south are paying 180-190 per Quintal to farmer yeild is 10-20% better than UP Bihar.

UP Bihar yeild is 10-20% less yet they wish 280 and now will settle for nothing less than 210/- after all Rahul Bhaiya is with them.

Scale of operation is good but with scale one should look profitability ; UP mills could never deliver comparable results to their southern counterparts.

Now the focus of Investors shold tilt towards south , peaceful and profitable.

Disclaimer: I have interest in Sugar Sector.

sonu11-Sakthi Sugars is in South India!!South India could be more peaceful,progressive and profitable.

Sonu,

South is under the rule of its local parties thats why sugar mills here are breathing easy. Congress politicking in local affairs is minimal.

I agree with sonu11.. Those invested in south sugar mills will reap bumper profits. Top picks are sakthi,renuka,dharani and ugar.

i too agree with sonu11 and tradehawk. mills in the south are less volatile either in terms of politics or pricing. sakthi is discounted very less in the market on p/e ratio basis compared to dharani or dhampur for example. the next four or five quarters are going to be very good for the sugar mills and south based mills will reap in the malai. sugar, i feel, is on a roll and with prices going thru the roof the sugar companies will benefit. ethanol blending also has been made compulsory and will add a new dimension to the revenue model.

My concern is that unless these companies will pay good dividend there is no real benefit which will accrue to minority shareholders.

Except that few of them may will be able to sell their stock to another shareholder at higher price.

i.e. money come into one shreholder bank from another incoming shareholder and not from the profit the business has generated.

sonu11-Yes you are right!!minority shareholdersmay not benefit!!Some shareholder maybe able to SELL at higher prices and benefit!!

Share prices doesnot depend on dividend.RIL share price is 170x dividend whereas JKLAKSHMI price is 30xdiv.ALL sugar stocks wl reach life time high bcs their profits 4 next 2 years wl b lifetime high.So div or no div shareholders wl get huge profits.

Why would the share price rise if there is no benefit for the shareholders? The price would not rise simply because it will have a good earning over the next 2 years if it cannot reward the shareholders handsomely.

Shareholders get rewards in the form of dividends (sooner or later). If you take records of all multi-baggers (most of them, exceptions are always there), you would see that they have shared their profit with the shareholder and shown continuous earning potential, thus keeping the shareholders interested and created demand for the company equity, thus also rewarding the shareholders handsomely in the form of price escalation.

As we all know, sugar is a cyclic story. Many have diversified their business to take care of this phenomenon to some extent but it cannot be done fully. If the sugar company cannot share their profit when they are raking mullah then do you expect they will extend the favour 2 years down the line when the scenario would not at all be favourable for this kind of profit? There will be a glut then and the sugar prices will crash. So will the sugar share prices!!!