May 13, 2016

Sugar related info

Here are some sugar stock related info I was reading. Sugar stocks are hot stock these days and they are going up every day. Sugar and agri related stocks are in demand. Due to good monsoon, Agri related stocks are in demand. Sugar stocks are in demand due to international reason and domestic reason. Sugar price has gone up. Ethanol price is also going up. Govt has mandated 5% ethanol blending from Sept, 2016 for all public sector oil companies. Ethanol is produced by Sugar companies from the by-products of cane.

The cost of production of sugar is Rs 2700.

Ethanol price realization will be better going forward. Currently 40 Per liter and it can be Rs 45.
Govt want 10% ethanol blending from 2017. Currently ethanol is not produced in required quantity.

Uttarakhand 2G Ethanol plant could be a game changer which is developed using indigenous technology.

“For agricultural water pumps, the blending can even be 100 per cent of bio-diesel,” he added.

Renuka sugar - VC and MD.
May 7, 2016

Rights issue of Equity Shares at Deep Discount

How would you know if Right issue that comes with discount is good to subscribe or not?

Try to know the intention of the management for the right issue. What they plan to do with the money they are going to earn by selling and diluting the equity shares. It can be for the correcting the troubled balance sheet. Right Issue are sold where Balance sheet is already very leveraged and it would be difficult for the company to raise money from other sources. But investors need to know exactly what company plan to do with the additional money.

Calculate "Ex-rights value per share". This will help in deciding whether the discount is really a discount or not.

Read here in details to understand Rights Issue of Equity Share.