Tyre stocks surge; Ceat, MRF up over 6%

Apollo Tyres, Goodyear India, TVS Srichakra, JK Tyre and Balkrishna Industries were up between 2%-4% on the BSE.

Shares of tyre manufacturers were trading firm, with the sector major MRF (Rs 43,237) and Ceat (Rs 1,130) rallying more than 6% each on the BSE in intra-day trade today.

Apollo Tyres, Goodyear India, TVS Srichakra, PTL Enterprises, JK Tyre & Industries and Balkrishna Industries were up between 2%-4% on the BSE, as compared to 0.13% rise in the S&P BSE Sensex at 03:22 pm.

All these stocks have outperformed the market by surging more than 10% in past one-month on expectation of a lower nature rubber prices could improve the profit margin of tyre companies as its accounts around 40% of input cost.

Ceat was up 6% to Rs 1,125, rallied 54% from its 52-week low of Rs 731 touched on June 24, in intra-day trade. 

Apollo Tyres hit a fresh 52-week high of Rs 222, up 4% on the BSE. The stock surged 73% from its one-year low of Rs 128, hit on January 20, 2016.

Sharekhan maintains ‘buy’ rating on the stock with price target of Rs 245 per share as the brokerage firm expects margins are likely to improve in H2FY2017, as the benefit of recent raw material softening accrues.

“Domestic natural rubber prices have corrected by about 11% over the last two months. Increased tapping post monsoon has led to enhanced rubber production. Given the increased tapping in the winter season, the rubber prices are likely to remain subdued. Further, international rubber prices have dipped by 9% in the last two months due to weak demand globally (especially moderating demand in China) and are likely to sustain at the current levels,” the brokerage firm said in a report dated September 6.

Anand Rathi Share and Stock Brokers maintain ‘buy’ rating on Ceat with target price of Rs 1,310 as the company’s decision to focus on the passenger-vehicle and two-wheeler sub-segments has borne fruit.

“After successfully embarking on two-wheeler and passenger-vehicle tyres with its latest venture into margin-accretive radial OHT tyres, Ceat is set for high growth. Its timely capacity additions are now being commissioned and will be fully ramped up in H1 FY18,” the brokerage firm said in a report dated September 7.

Company	19/08/2016	LTP	% chg	1-year low	% chg
JK Tyre & Indust	113.10	149.50	32.18	74.05	101.9
CEAT	864.80	1129.85	30.65	731.2	54.5
Apollo Tyres	175.30	221.50	26.35	127.95	73.1
MRF	36091.70	43082.60	19.37	30464.25	41.4
Goodyear India	554.20	638.20	15.16	443.1	44.0
Balkrishna Inds	748.05	848.00	13.36	551.35	53.8
TVS Srichakra	2537.50	2848.35	12.25	1945.1	46.4
Sensex	28077.00	28647.98	2.03
LTP : Last traded price on BSE in Rs at 03:22 pm.