 "Tyres, Bridgestone")
Shares of tyre manufacturers have outperformed the market on expectation that falling natural-rubber prices will help boost margins.
At 11:09 am, Goodyear India, Ceat, TVS Srichakra Tyres, JK Tyre & Industries, MRF and Apollo Tyres were up between 1% and 3% on the BSE. The benchmark S&P BSE Sensex was down marginally 0.02% at 28,366 points.
Thus far in September, most of these stocks have outperformed the market by surging up to 21% against 0.30% decline in the Sensex.
Apollo Tyres was up 1.4% at Rs 217 after hit a record high of Rs 220 on the BSE in intra-day trade. The stock rallied 18% so far in the current month.
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.
The Central Government is also working on a National Rubber Policy, which aims to increase the domestic rubber production in the long run in order to control surging imports. These factors are expected to reduce domestic rubber prices in the medium to long term, added report.
At 11:09 am, Goodyear India, Ceat, TVS Srichakra Tyres, JK Tyre & Industries, MRF and Apollo Tyres were up between 1% and 3% on the BSE. The benchmark S&P BSE Sensex was down marginally 0.02% at 28,366 points.
Thus far in September, most of these stocks have outperformed the market by surging up to 21% against 0.30% decline in the Sensex.
Apollo Tyres was up 1.4% at Rs 217 after hit a record high of Rs 220 on the BSE in intra-day trade. The stock rallied 18% so far in the current month.
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.
The Central Government is also working on a National Rubber Policy, which aims to increase the domestic rubber production in the long run in order to control surging imports. These factors are expected to reduce domestic rubber prices in the medium to long term, added report.
| Company | 31/08/2016 | LTP | % chg |
| CEAT | 894.15 | 1078.15 | 20.58 |
| Apollo Tyres | 183.00 | 216.70 | 18.42 |
| JK Tyre & Indust | 131.95 | 147.50 | 11.78 |
| MRF | 37449.00 | 41469.00 | 10.73 |
| Goodyear India | 561.80 | 616.00 | 9.65 |
| TVS Srichakra | 2601.00 | 2779.65 | 6.87 |
| Balkrishna Inds | 873.60 | 885.00 | 1.30 |
| Sensex | 28452.17 | 28365.88 | -0.30 |
| LTP: Last traded price on BSE in Rs at 11:09 am | |||
