Amid rise in raw material costs, margin pressures to weigh on tyre stocks

Tyre companies may not be able to fully pass on the surge in raw material costs

The tyre sector is expected to be among the most impacted within the auto component space due to the surge in raw material costs in the March quarter. The impact is due to the rise in crude price derivatives and natural rubber costs which account for 55 per cent and 33 per cent of the raw material basket of tyre makers. 

While tyre companies could see sharp sequential moderation in margins in the March quarter, profitability of battery makers should hold up as the price of lead has been fairly steady, according to IIFL Research. This is visible from the