Skid marks may appear in Street as oil prices wear out tyre stocks

Margins have likely peaked in Q1 as commodity headwinds start to bite

Tyre stocks have been on a tear over the past six months, with average returns exceeding 45 per cent. Except for Apollo Tyres, which has seen a slight correction in the last month and a half, limiting its gains to 16 per cent, listed peers such as MRF, CEAT Tyres (formerly Cavi Elettrici e Affini Torino), and JK Tyre & Industries have delivered returns exceeding 30 per cent during this period.

Production-related constraints and sluggish demand in Europe, where sales are expected to remain flat, coupled with high valuations, have contributed to Apollo Tyres’ underperformance.

The tyre sector’s gains can