FIIs up stakes in these 3 ethanol stocks as India pushes E20 fuel goals | Stock Market News

Ethanol stocks are in the limelight as India accelerates its E20 fuel programme, which aims to make 20% ethanol blending with petrol the nationwide standard.

The government has advanced the rollout to reduce crude oil imports, improve energy security, and cut carbon emissions. Rising demand for ethanol has put sugar mills, grain-based distilleries, and ethanol equipment manufacturers in focus. Supportive policies, long-term blending targets, and increasing investments in biofuels have strengthened investor sentiment.

Companies with significant ethanol production capacity are therefore attracting attention, including from foreign institutional investors (FIIs). Here are a few ethanol manufacturers in which FIIs increased their stakes in the June 2026 quarter.

Bajaj Hindusthan Sugar is India's leading sugar and ethanol manufacturing company, operating 14 sugar plants in Uttar Pradesh with a combined sugarcane crushing capacity of 136,000 tonnes crushed per day (TCD), and an alcohol distillation capacity of 800 kilolitres per day (KLD). It is also among the largest ethanol producers in India.

Having pioneered India's ‘Fuel Ethanol’ programme, it presently manufactures 38 million litres of ethanol a year. In response to the increasing demand for ethanol, the company plans to expand capacity to around 218 million litres a year.

FIIs marginally increased their holdings in the company, from 1.13% in the March quarter to 1.14% in the June quarter.

The company reported revenue of ₹1,669 crore in Q4 FY26, up from ₹1,552 crore in the corresponding quarter last year. Net profit surged to ₹391 crore from ₹31 crore a year earlier.

The company’s expansion of distillery capacity, higher ethanol supplies to oil marketing companies, and improved operational efficiency could support growth.

Revenue will continue to depend on sugar production, ethanol sales, and power generation, while industry performance will also be influenced by sugarcane availability, government regulations, export policies, and prevailing sugar and ethanol prices.

The company is one of the largest integrated sugar manufacturers in India and a market leader in its engineering businesses, spanning power transmission, water & wastewater treatment solutions, and defence.

It has a growing presence in the alcohol segment, producing potable alcohol and fuel-grade ethanol.

FII holdings in the company increased to 7.69% in the June quarter from 7.44% in the March quarter.

Triveni Engineering has completed a demerger to split its high-margin, technology-driven engineering division from its cyclical sugar business. Under the arrangement, shareholders on record as of 22 July 2026 will receive 1 share of Triveni Power Transmission for every 3 shares held in Triveni Engineering. Post-demerger, Triveni Engineering's core operations will consist of its sugar, distillery and alcohol, and water management businesses.

Since a demerger has occurred, let’s focus only on Triveni Engineering's businesses. According to management, consolidated revenue from the water business increased by 15% to ₹270 crore, driven by an acceleration in execution of its EPC portfolio. The prior year's PBIT also included a one-time favourable arbitration award, making the normalized underlying operational profitability for FY26 quite encouraging.

Turning to the ethanol business, management noted that government bodies and NITI Aayog are actively formulating policies for ‘Beyond E20’ applications. They believe this expansion is a distinct possibility, supported through both formal frameworks and informal channels. This should help the company’s ethanol business if more than 20% ethanol blending is approved.

As for sugar, profitability depends on sugar prices, cane availability, monsoon conditions, government policies on cane pricing, export quotas, and minimum selling prices.

Praj Industries, which began as a supplier of ethanol plants, is now a top company with a bouquet of sustainable solutions for bioenergy, high-purity water, critical process equipment, breweries and industrial wastewater treatment.

FIIs increased their stake marginally in the June 2026 quarter to 17.75%.

In Q4FY26, the company reported revenue of ₹844.6 crore, down from ₹859.7 crore a year earlier. Net profit dropped to ₹11.6 crore from ₹39.8 crore a year earlier. Management admitted that the performance in Q4 and the full year FY26 was impacted by several external headwinds.

The company’s 1G domestic business continued to see a slowdown in greenfield fuel ethanol products, but it believes the situation will improve following the announcement of higher blending mandates. In the interim, though, Praj Industries has seen increased demand for greenfield extra-neutral alcohol (ENA) plants, with management saying it has a clear technology edge in ENA.

The company is also seeing growing demand for its brownfield solutions, as customers prioritize operational efficiency improvements and value-added co-products such as distiller's corn oil (DCO). The company secured a good number of DCO orders during Q4FY26, and has a robust inquiry pipeline.

Before investing in ethanol-related stocks, investors should evaluate several factors, including government policies on ethanol blending, feedstock availability, ethanol pricing, sugar production cycles, crude oil prices, company-specific execution, balance sheet strength, capacity expansion plans, and valuation.

Since the sector is policy-driven and cyclical, long-term returns will depend on each company's ability to diversify revenues, improve operational efficiency, and capitalize on India's growing biofuel and clean energy initiatives

Investors should always evaluate a company's fundamentals, corporate governance, and stock valuations before making an investment decision.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

Equitymaster is India's leading independent equity research platform, providing in-depth research and analysis on BSE- and NSE-listed companies since 1996. As a SEBI-registered Research Analyst [Registration No. INH000021128], Equitymaster covers the full spectrum of Indian equities — bluechip stocks, midcap stocks, smallcap stocks, and microcap stocks.<br><br> At the heart of Equitymaster's research philosophy are the principles of value investing — particularly the margin of safety and the primacy of investment over speculation. All research is produced by an independent team of SEBI-registered research analysts with vast experience in Indian financial markets, using detailed systems and processes developed entirely in-house.<br><br> With over 17 lakh readers across 72 countries, Equitymaster is one of India's leading equity research publications. Since 1996, the goal has remained the same — to deliver honest, unbiased, and credible equity research that helps Indian investors make better, more informed decisions.

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