Olam: Citi maintains Buy with TP$3.10 on reversal of India’s cotton export ban. House view is that such bans/reversal are well handled by supply chain mgrs such as Olam due to multi-sourcing terms with customers in other key producer countries as well and believes that such events will show the resilience of such mgrs.
The perception of raised risk premium is impacting valuations and Olam is now trading at Similar levels to those seen during the global financial crisis period.
Olam’s industrial segment made up approx 17% of its total volumes in 1H12. Co indicates that it sources about 10% of its cotton from India and also participates in the domestic cotton trade which may mitigate negative impact from an export ban.
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