Ethanol Blending Boost: 3 Stocks to Watch as Industry Eyes Over 20% Supply

#2 Dalmia Bharat Sugar and Industries

Next on our list is the stock of Dalmia Bharat Sugar.

The company operates across sugar, ethanol (distillery), and power generation (co-generation), making it more than just a commodity sugar player.

Dalmia Bharat Sugar Financial Snapshot

On the financial front the company's total revenue stood at Rs 6,980 m, showing 17% YoY growth. Net profits of Dalmia Bharat Sugar were placed at Rs 1,700 m, up 17%.

The net profits rose, despite lower cane crush and higher cost of production for sugar due to cane price increases in Maharashtra and Uttar Pradesh.

Moving ahead, the Board has approved the installation of 13 TPD Compressed Bio Gas project at the Kolhapur plant with expected commissioning by November 2026.

The company is also undertaking capital expenditure for the installation of steam-saving equipment at the Jawaharpur plant. This initiative is expected to reduce steam consumption by approximately 10%, resulting in significant bagasse savings.

Dalmia Bharat Sugar and Industries could see growth driven by India's ethanol blending push, which improves margins and reduces sugar cyclicality. Its integrated model (sugar, ethanol, power) provides diversification benefits.

However, growth remains tied to government policies, cane pricing, and export regulations.

#3 Magadh Sugar and Energy

Next on our list is Magadh Sugar and Energy. The company's core business includes Sugar, Ethanol and Co-Generation.

The company has 3 sugar mills with a combined crushing capacity of 21,500 TCD. It also has two distillers with a total capacity of 155 KLPD and a co-generation facility to generate 38 MW power.

Magadh Sugar Financial Snapshot

Financially speaking, Magadh Sugar reported consolidated sales at Rs 2,964 m vs Rs 2,838 m YoY. Net profits of Magadh Sugar and Energy were Rs 251 m vs Rs 211 m YoY.

Revenue for the quarter was driven by higher realisation from sugar sales and higher quantities of sugar sold, despite a decline in ethanol sales volume.

For 2025-26 crushing season, the State Advisory Price (SAP) of sugarcane in Bihar had been increased by Rs 15 per quintal, raising the price to Rs 380 per quintal for early-maturing varieties and Rs 360 per quintal for general varieties, reflecting an over 4% rise compared to the previous season.

This has partially mitigated the impact of increase in sugarcane price.

The company says that government policy will continue to drive industry direction. Export quotas, Minimum Selling Price (MSP) of sugar, ethanol pricing, and stock limits remain key variables influencing profitability and cash flows.

Conclusion

The ethanol sector has become a focal point of India's energy transition.

The government has successfully moved up its E20 (20% ethanol blending) target to the current 2025-26 cycle, creating a structural shift in how sugar and grain-based companies operate.

Ethanol blending is a strategic investment in India's energy transition. With the E20 mandate active in 2026, demand is guaranteed through oil marketing companies.

While it offers sugar and grain-based firms stable revenue diversification and aligns with ESG goals, investors must weigh risks like government pricing caps and crop volatility.

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