Industry Economy & Growth Companies

Rising rubber prices likely to benefit Sri Lanka’s listed companies

Listed plantation companies with higher revenue in rubber may benefit from rising rubber prices with higher revenue exposure, First Capital has said in a research note.

“AGAL, KGAL, KOTA, and HOPL are well positioned to benefit from rising rubber prices, given that the rubber segment accounts for c.15.0% or more of their revenue.”

Last week most plantation companies saw their share prices rise, with Watawala and Sunshine topping the positive contributors to the All Share Price Index on Thursday.

Other listed companies with rubber exports such as Richard Pieris Exporters are also likely to benefit from rising rubber prices and rupee depreciation, according to the research note.

Dipped Products, which produces niche gloves for export, is likely to benefit too as its revenue is USD-denominated.

Rising rubber prices are also likely to support Richard Pieris and Company’s topline growth.

However, Kelani Tyres, which has a 50 percent stake in CEAT Kelani Holdings Pvt Ltd, may see rising rubber prices impacting is margins.

“The extent of the impact will depend on the company’s ability to pass on higher costs to customers. Meanwhile, higher vehicle registrations are expected to drive topline growth.”

Source: Economy Next