The news of a likely Bajaj Hindustan-Balrampur Chini deal has put the spotlight on a possible consolidation in the sugar sector.
Even though the recent boom in the sector spells pricier assets but returns will be visible only in the longer term.
"If we look for a two-year time frame then it is a positive move, otherwise in the near term it is a dampener," said Bhavesh Gandhi, analyst at Indiainfoline.
Acquisitions are on the cards for Indian sugar companies not just in the domestic market but even overseas.
Shree Renuka Sugars, for one, is more keen on acquiring mills in Brazil and is seen in the race to acquire the assets of Equipav Group with an eye on sourcing half its raw sugar from Brazil by 2011.
Consolidation in the sector is always good news as it reduces the clutter.
"It is a process of consolidation which has been initiated. The consolidation phase augurs well for the industry," said Vijay Banka, CFO of Dwarikesh Sugar Industries.
The mergers and acquisitions space in the sugar sector spells sweet tidings for shareholders as competition for assets drives up valuations further in a bumper year