Gulshan Polyols, a small-cap ethanol manufacturing company, saw its shares surge up to 16% after oil marketing companies (OMCs) declared additional incentives for ethanol produced using damaged food grain and maize.

Shares of Gulshan Polyols closed the trading session on Wednesday at Rs 225.50, 11.08% higher than its previous closing price on the National Stock Exchange (NSE). The stock jumped nearly 16.3% during the trading session to touch an intraday high of Rs 236. 

In an exchange filing, the company said that OMCs declared an additional incentive amount of Rs 3.71 per litre on ethanol produced from damaged food grain and maize with immediate effect given the current embargo on the release of Surplus Rice by the Food Corporation of India (FCI) and the increase in the market rate of Damaged Food Grain and Maize. 

This, along with the earlier incentive announced on August 7, brings the total incentive amount on ethanol produced from damaged food grain to Rs 8.46 per litre and on ethanol made from maize to Rs 9.72 per litre. This will be effective on all vendor invoices billed on or after August 7 for the ESY 2022-23 balance period. 

With this additional incentive, OMCs expect vendors or suppliers to provide the maximum possible ethanol to achieve the ethanol blending target. Analysts expect the incentives to profit ethanol-producing companies.