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Tyre stocks may rerate on sustained demand momentum, margin gains

Recovery in the replacement segment and sales to auto makers to drive volumes

Tyre
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Ram Prasad Sahu

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Improving volume growth trajectory of auto original equipment manufacturers (OEMs) and earnings recovery led by rising margins are positive triggers for tyre stocks. While companies with a higher exposure to global/European markets could face demand worries given the macroeconomic environment, domestic-focussed companies could see earnings upgrades going ahead.

The near term demand trajectory and Q4 earnings would be the key monitorables. Most segments within the auto sector posted a healthy growth on a YoY basis in the March quarter, led by lower base and festive demand as Navratra/Ugadi fell in March this year from last April levels. The demand momentum

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First Published: Apr 18 2023 | 6:17 PM IST

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