Davangere Sugar Company Ltd shares gained more than 6% in Tuesday’s trading session as investors focused on the company’s ethanol expansion plans and recent revenue growth.
The company has outlined an expansion of its distillery operations alongside its existing sugar and power businesses. Its current distillery capacity stands at 65 KLPD, while the proposed expansion would add another 85 KLPD.
At around 3:02 pm on September 22, 2026, Davangere Sugar shares were trading at Rs 2.27 on the NSE, up 6.07% from the previous close, according to Goodreturns.
Davangere Sugar Plans 85 KLPD Distillery Expansion
Davangere Sugar currently operates a 65 KLPD distillery, with the facility able to use multiple feedstocks including sugar syrup, molasses and grain, according to the company’s investor presentation cited in the latest reporting.
The company has proposed adding 85 KLPD of distillery capacity, taking the potential total capacity to 150 KLPD if the expansion is completed.
A regulatory disclosure on the capacity addition said the existing 65 KLPD facility was operating at around 96% capacity utilisation when the expansion was approved. The proposed addition was expected to be implemented within 18 months, with estimated investment of approximately Rs 127.5 crore. The company identified FCCB funding as the proposed financing route.
The expansion was linked by the company to rising ethanol demand and supportive government policies.
Ethanol Adds to Sugar and Power Operations
Davangere Sugar’s operations span sugar manufacturing, ethanol production and cogeneration.
The company has sugarcane crushing capacity of approximately 4,750 tonnes of cane per day (TCD). Its existing distillery capacity is 65 KLPD, while its cogeneration operations have an installed capacity of around 24 MW.
The flexibility to process sugar syrup, molasses and grain gives the distillery multiple potential feedstock routes. However, the availability and economics of each feedstock can vary with sugar production, commodity prices and ethanol-market conditions.
The planned capacity addition would increase the potential contribution of ethanol to the company’s overall business mix, although the proposed 150 KLPD capacity should not be treated as current operating capacity.
FY26 Revenue Rises to Rs 238.77 Crore
Davangere Sugar reported revenue of Rs 238.77 crore in FY26, compared with Rs 214.99 crore in the previous financial year, representing an increase of approximately 11.1%, according to the latest report.
The revenue increase provides financial context for the company’s expansion plans, although revenue growth alone does not establish the future profitability or returns of the proposed distillery investment.
The company reported net profit of Rs 8.51 crore for 2026, according to market data compiled by Livemint.
FCCB Financing Remains Relevant to Expansion
The proposed ethanol expansion is linked to the company’s wider financing strategy.
Davangere Sugar has outstanding foreign currency convertible bonds (FCCBs), with 900 FCCBs carrying an aggregate principal value of US$90 million remaining outstanding, according to recent reporting.
The company has also received approval for an investment of approximately US$84.95 million in its wholly owned UK subsidiary, Aurevant Global Ltd. The subsidiary was incorporated in June 2026 and is intended to explore opportunities connected with the sugar and ethanol businesses.
Future FCCB conversion could increase the company’s outstanding equity base and potentially dilute existing shareholders’ ownership percentage. The actual effect would depend on the terms and whether conversion takes place.
UK Subsidiary Expands International Focus
Aurevant Global was established in the UK as a wholly owned subsidiary of Davangere Sugar.
The company has described the subsidiary as a vehicle for exploring opportunities linked to sugar and ethanol, including potential overseas expansion initiatives. The board approved the proposed US$84.95 million investment in July 2026, although the approval did not mean that the entire amount had already been deployed at the time of disclosure.
Davangere Sugar has also proposed a preferential issue of approximately 106.41 crore convertible equity warrants at Rs 3.77 per warrant, aggregating around Rs 40.12 crore, to promoter-group members against outstanding unsecured promoter loans. The proposal carries implications for the company’s future equity structure if the warrants are converted.
Ethanol Expansion Remains a Key Business Development
The proposed distillery expansion would represent a substantial increase over Davangere Sugar’s existing ethanol production capacity.
For the sugar producer, the move provides an opportunity to increase the role of ethanol alongside sugar and cogeneration. At the same time, execution will depend on financing, construction and commissioning of the additional capacity.
The company’s feedstock flexibility is also relevant as ethanol production economics can differ between sugar-based and grain-based routes.
Bioenergy Business Analysis
Davangere Sugar’s ethanol strategy is centred on expanding distillery capacity from its existing 65 KLPD level, with an additional 85 KLPD proposed. If implemented, the expansion would materially increase the company’s potential ethanol-production footprint alongside its sugar and cogeneration operations.
The recent share-price movement provides market context but does not establish the commercial outcome of the expansion. The more relevant operating milestones will be financing, implementation of the proposed capacity addition and eventual utilisation of the expanded distillery.
The company’s use of FCCB financing and proposed investment in its UK subsidiary also means that the expansion should be viewed alongside its wider capital and corporate-structure developments. These factors will influence how the planned ethanol capacity is funded and ultimately integrated into the company’s business.
