Rising rubber prices to lift revenues for top plantation firms

Listed plantation companies with significant rubber interests stand to gain from climbing market prices, according to a research note by First Capital. Agalawatte Plantations (AGAL), Kegalle Plantations (KGAL), Kotagala Plantations (KOTA), and Horana Plantations (HOPL) are particularly well-placed for growth, as the rubber segment represents approximately 15% or more of their total revenue.

Last week, share prices for most plantation firms climbed, with Watawala and Sunshine Holdings emerging as top contributors to the All Share Price Index on Thursday. Other entities involved in rubber exports, such as Richard Pieris Exporters, likely benefit from the dual advantage of rising global prices and the depreciation of the rupee.

Dipped Products, a manufacturer of specialized export gloves, also expects gains since its revenue is denominated in US dollars. Similarly, the upward trend in rubber values should support the overall topline growth of Richard Pieris and Company.

However, Kelani Tyres—which maintains a 50% stake in CEAT Kelani Holdings Pvt Ltd—faces potential margin pressure due to increased raw material costs. The final impact on the company depends on its capacity to transfer these higher costs to consumers, though an increase in vehicle registrations is anticipated to drive volume growth.