Ethanol stock in focus after receiving Govt approval to expand its capacity

SYNOPSIS: MVK Agro Food Product received an IEM from the Government, approving an increase in sugarcane crushing capacity and molasses capacity, supporting future growth in its sugar manufacturing operations.

During Friday’s trading session, shares of an integrated sugar and other allied products manufacturing company are in focus on NSE, after the company announced securing the government’s approval to ramp up sugarcane and molasses capacity.

At 01:43 p.m., shares of M.V.K. Agro Food Product Limited were trading at Rs. 642.1 on NSE, compared to its previous closing price of Rs. 659.95, with a market cap of Rs. 3,243 crores. The stock has delivered multibagger returns of around 1,674 percent in one year, and has gained by around 198 percent in the last six months.

What’s the News

According to the latest disclosures filed with the NSE, MVK Agro Food Product Limited has received the Industrial Enterprises Memorandum (IEM) from the Ministry of Commerce & Industry, Government of India.

Pursuant to the approval granted under the IEM, the company has received clearance for a significant expansion in its operational capacities. Sugarcane crushing capacity has been approved to increase from 2,500 tonnes of cane per day (TCD) to 4,000 TCD, while molasses capacity will be enhanced from 16,800 metric tonnes to 26,880 metric tonnes per annum. The company noted that it had earlier submitted an application to the Government seeking approval for the enhancement of its sugarcane crushing capacity.

Financials & More

MVK Agro reported a marginal growth in revenue from operations, experiencing a year-on-year increase of around 6 percent, from Rs. 141.4 crores in FY24 to Rs. 149.7 crores in FY25. Likewise, its net profit increased during the same period from Rs. 8.7 crores to Rs. 9.33 crores, representing a marginal rise of over 7 percent YoY.

M.V.K. Agro Food Product Limited operates across the agro-commodity value chain, primarily engaged in the business of manufacturing food products, with a core focus on producing jaggery from sugarcane. 

During sugar manufacturing, by-products such as bagasse, molasses and pressmud are accumulated. These are commercially supplied to third-party bio-coal and ethanol manufacturers by the company, enabling full value-chain integration and waste utilisation. The company operates an integrated sugar manufacturing facility in Nanded, Maharashtra, with a capacity of 2,500 TCD.

The stock was listed on 7th March 2024, and as outlined in its RHP, the IPO proceeds were primarily earmarked for setting up a greenfield facility in Nanded, Maharashtra, focused on ethanol manufacturing along with bio-CNG generation and fertiliser bottling, with an estimated allocation of Rs. 52.38 crore.

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