Published: 08th July 2024
By: Value Research
Realty, steel, oil and coal were deemed poor investments until their cycle turned a few years ago. A similar turnaround might be brewing in the cyclical tea plantation sector!
The companies have given a median return of -30% since 2018 as global tea prices stagnated over the past decade due to oversupply from Africa, impacting key exporters like India.
In addition, rising costs, particularly employee wages, eroded margins of Indian tea plantation companies.
The industry is marred with an oversupply issue. But the non-viability is leading to players exiting the business with many tea estates shutting down.
Climatic changes also disrupted supply recently, leading to a surge in tea prices. Kolkata auction prices doubled from $1.6 a kg in March 2024 to over $3 a kg in May 2024.
These trends suggest the industry may be nearing its rock bottom, which is the best time to invest, especially in cyclical sectors. Tea stocks’ valuations also back this up. How? Click the link below.