Graanul - slow burn but winter is here

Post our review of Granul's Q2 2024 results, our investment thesis on the credit remains unchanged. We have analysed current demand trends, average selling prices for pellets, and the dynamics surrounding the renewal of existing contracts. Based on insights from management regarding the outlook for pellet prices and overall market conditions, we have updated our financial projections for 2025 and 2026. To that end, we assessed Graanul's cost structure and capital expenditure assumptions to gain a comprehensive understanding of their ability to generate free cash flow and de-lever going forward.