India’s push to blend ethanol with petrol has gathered pace over the past decade, gradually turning into one of the country’s key energy transition initiatives. What began as a simple effort to reduce dependence on imported crude oil has evolved into a broader policy that links to energy security.
Reflecting this shift, the Ministry of Petroleum and Natural Gas, on 17 February 2026, issued a fresh notification allowing oil companies to sell Ethanol Blended Motor Spirit with an ethanol content of up to 20% (E20). The directive will come into force from 1 April 2026, replacing the earlier 2021 notification that permitted blending of up to 10% ethanol.
The E20 Mandate: A ₹1.44 Lakh Crore Shield for India’s Economy
The progress of the programme is already visible. Between FY15 and FY25, ethanol blending by public sector oil marketing companies helped India save more than ₹1.4 lakh crore in foreign exchange by reducing crude oil imports.
As a result, around 245 lakh metric tonnes of crude oil were substituted, helping reduce carbon emissions by nearly 736 lakh metric tonnes. This is equivalent to planting about 30 crore trees.
With India importing nearly 80% of its crude oil requirements, the ethanol blending programme is likely to remain a policy priority. As blending levels move toward 20%, the shift is creating a structural opportunity for companies involved in ethanol production and related supply chains.
Against this backdrop, here are three companies benefiting from India’s ethanol blending push.
#1 The 2G Revolution: Praj’s Blueprint for India’s Stubble-to-Fuel Transition
Praj Industries is an advanced biotechnology and engineering company. It specializes in sustainable solutions for the environment, energy, and farm-to-fuel technologies. It has over 1,000 customer references across more than 100 countries. Its key clients include Indian Oil, Bharat Petroleum, and Hindustan Petroleum.
Praj accounts for around 10% of the global ethanol production market share and operates with net debt. Praj’s operations are primarily divided into three main revenue-generating segments: Bio Energy (71% of revenue), Engineering (18%), and High Purity Solutions (11%).
About the Praj Bio Energy Segment
Bio Energy is the company’s core business, offering solutions for 1G (first-generation) and 2G ethanol plants, as well as Compressed Bio-Gas. Praj is also pioneering “Future Fuels” such as Sustainable Aviation Fuel, marine biofuels, and bio-hydrogen, aiming to create carbon-neutral transportation fuels.
Beyond 1G: Modernizing Brownfields Amidst Execution Slowdowns
The domestic 1G greenfield market is currently experiencing a slowdown due to supply-demand imbalances, liquidity challenges, and prolonged financial closures. They have extended project execution cycles from 9-12 months to 12-15 months. As project execution is extending, revenue realization is being delayed, resulting in operating deleveraging.
Consequently, Praj is now shifting its focus toward brownfield solutions, with a primary emphasis on modernizing and upgrading existing plants. These upgrades enhance operational efficiency, reduce water and steam consumption, and help distilleries maximize profitability.
Unlike 1G ethanol (produced from sugary or starchy crops), 2G ethanol is produced from agricultural residues such as rice straw, wheat straw, bagasse, and corn stover. This not only provides a clean energy source but also tackles severe pollution issues by reducing crop stubble burning and offering farmers additional income.
Praj’s proprietary 2G technology platform, Enfinity, is powering major domestic bio-refineries. The Indian Oil 2G plant in Panipat has already produced over 1 million liters of ethanol and is undergoing stabilization. Commissioning efforts are also underway for massive 2G plants for HPCL in Bathinda and BPCL in Bargarh.
From Brazil’s Dual-Feed Maize to Europe’s Softwood Ethanol
Internationally, Praj has partnered with Sweden’s Sekab to deploy Celluniti technology, which converts forest residue (softwood) into ethanol, primarily serving the European region. Praj is also helping existing ethanol plants generate additional revenue by installing modules that extract high-value co-products.
Praj’s advanced ‘Grain-to-Ethanol’ technology is gaining popularity internationally. In Brazil, it is assisting the industry in adopting a ‘dual-feed’ approach that uses maize alongside traditional sugarcane. Praj is also expanding its low-carbon ethanol operations in the US and has secured orders for new ethanol plants in Paraguay, Colombia, Argentina, and East Africa.
The Profitability Crunch: Analyzing the ₹33 Crore Labour Code Impact
From a financial perspective, revenue declined around 2% year-on-year to ₹2,323 crore in 9MFY26. EBITDA (earnings before interest, tax, depreciation, and amortization) stood at ₹134.6 crore, while the margin halved to 5.8%, from the typical range of 10-11%. Net Profit was sharply down to ₹12 crore, down from ₹180 crore in the same period last year.
Praj’s profitability was impacted by a one-time incremental liability of ₹33.4 crore due to new labour codes. Additionally, overall margins were diluted by lower-margin export contracts in Africa and unabsorbed fixed costs at their new Mangalore manufacturing facility. As of Q3FY26, the order book stood at ₹4,491 crore, offering about 1.5 years of revenue visibility.
#2 The Sugar-to-Biofuel Pivot: Balrampur’s 80,000 Tonne Infrastructure Play
Balrampur Chini Mills is India’s second-largest integrated private-sector sugar company. The company operates 10 manufacturing plants across cane-rich Eastern and Central Uttar Pradesh, effectively utilizing sugarcane to create multiple value-added products.
The company has a total sugarcane crushing capacity of 80,000 tonnes per day. While sugar remains the primary revenue driver, accounting for 77.16% of revenue in FY 25, the company is strategically reducing its overreliance on sweeteners.
Balrampur is a pioneer in ethanol manufacturing, operating 5 distilleries with a total capacity of 1,050 kiloliters per day (KLPD). It produces ethanol using multiple feedstocks, including B-heavy molasses, C-heavy molasses, sugarcane juice/syrup, and grains. Ethanol is the central pillar of its business.
Triple Capacity: Analyzing the ₹700 Crore Multi-Feedstock Gamble
This company is a leader in this industry. It tripled its distillery capacity by investing ₹700 crore between 2018 and 2023. To maximize operational days and ensure tender eligibility, Balrampur plants have been designed to be flexible in terms of feedstock (raw materials).
In FY26, the company expects to sell between 26-27 crore liters of ethanol, with an approximate production mix of B-heavy (65%), C-heavy (25%), and syrup (10%). However, recent policy decisions have severely impacted the profitability of the company’s ethanol segment.
The Margin Squeeze: Navigating the 16.4% Rise in Sugarcane Input Costs
Its most pressing issue is the lack of a revision of the procurement prices for ethanol produced via the juice and B-heavy routes over the past three years. This stagnation persists despite the Fair and Remunerative Price of sugarcane increasing significantly (by 11.5% to 16.4% in recent seasons).
As the raw material (cane) cost has risen without a corresponding increase in the ethanol price, Balrampur has had to absorb the cost difference. Management has strongly voiced that without a price revision, large-scale diversion of sugar into the B-heavy and juice ethanol routes will become financially unviable.
Beyond Sugarcane: The Hurdles in Scaling Maize-Based Ethanol Quotas
To maintain operations during the sugar off-season, it utilizes grains to produce ethanol. However, it faces hurdles here as well. For instance, despite having the capacity to produce 5 crore liters of maize-based ethanol, the government only accepted tenders for about 3.15 crore liters. The profitability of this route is also heavily dependent on fluctuating maize prices.
From a financial perspective, revenue increased around 19.3% year-on-year to ₹4,667 crore in 9MFY26, driven by higher sugar sales volume. EBITDA increased by 35% to ₹456.50 crore, while the margin improved 110 bps to 9.8%. Net profit jumped 5.8% to ₹219 crore.
#3 Triveni Engineering: Scaling 860 KLPD Capacity for India’s Ethanol Mandate
Triveni Engineering is one of India’s largest integrated sugar manufacturers, operating eight sugar mills with a combined sugarcane crushing capacity of 70,500 tonnes per day. It is a leading contributor to India’s Ethanol Blended Petrol Program. Triveni operates five distilleries across Uttar Pradesh, with a combined distillation capacity of 860 Kilolitres per Day.
Multi-Feed Mastery: Leveraging Feedstock Agility to Hedge Policy Risks
A key competitive advantage is their multi-feed capability. This allows it to interchangeably use sugarcane-based feedstocks (B/C-heavy molasses, & sugarcane juice/syrup) and grain-based feedstocks (such as maize, surplus rice, and damaged food grains) to optimize production based on raw material availability and government policies.
Ethanol accounts for the vast majority of Triveni’s alcohol business, at 92% of total alcohol sales in both FY25 and Q3FY26. In the ethanol blending, Oil Marketing Companies secured around 1,048 crore litres of ethanol, and more tenders (Cycle 2 and 3) are expected shortly. Triveni plans to participate in these tenders.
The company states that as India is approaching the 20% blending target, an Inter-ministerial Group, along with NITI Aayog, is actively drafting a roadmap for blending “Beyond E20.” This promises sustained long-term demand for Triveni’s ethanol output. The ethanol business is also integrated with its environmental sustainability goals.
The ‘Beyond E20’ Roadmap: Navigating Overcapacity and NITI Aayog’s Vision
To future-proof the business against changing policies, Triveni is also exploring opportunities in emerging bio-based products such as sustainable aviation fuel (SAF), green hydrogen, compressed biogas, and 2G ethanol. However, management has highlighted a massive ethanol overcapacity in the country.
Like Balrampur, Triveni’s management has also strongly emphasized that ethanol prices need an upward revision across feedstocks. Despite this need, the company does not expect any price increases to materialize until the next Ethanol Supply Year.
Earnings Audit: Decoding the 98% Profit Surge
From a financial perspective, revenue increased around 17.8% year-on-year to ₹4,783 crore, driven by higher sales volume in the sugar and distillery segment. EBITDA increased by 56% to ₹338 crore, while the margin improved 180 bps to 7.1%. Net profit jumped 94% to ₹101 crore, albeit from a low base.
Biofuel Valuations: Is the Market Overlooking the Cyclical Trap?
Praj leads the pack in return ratios such as Return on Capital Employed (ROCE) and Return on Equity (ROE), while Balrampur and Triveni lag behind due to the sugar industry’s cyclicality. Valuation-wise, all three companies are trading at a premium relative to industry multiples and are approximately in line with their historical average valuations.
| Peer Comparison (X) | |||||
| Company | EV/EBITDA | 5Y Median EV/EBITDA | Industry EV/EBITDA | ROCE (%) | ROE (%) |
| Praj | 23.7 | 25.8 | 15.2 | 17.9 | 14.1 |
| Balrampur | 12.6 | 12.7 | 6.8 | 10.2 | 11.0 |
| Triveni | 13.2 | 11.2 | 6.8 | 8.7 | 8.1 |
| source: screener.in | |||||
India’s move towards 20% ethanol blending is creating opportunities for companies across the biofuel and sugar ecosystem. Praj Industries benefits through technology and plant solutions, while Balrampur and Triveni gain from integrated sugar-ethanol operations.
However, profitability remains influenced by policy decisions, feedstock costs, and ethanol pricing dynamics. Meanwhile, add them to your watchlist and stay tuned.
Disclaimer:
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted, and widely used source of information.
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About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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