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Thursday, Feb 10, 2005

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Tyre stocks on a roll as rubber price falls

Our Bureau

Kolkata , Feb. 9

THE tyre stocks are attracting renewed attention from the market players for reported rise in demand and fall in input cost.

According to Mr Gul Teckchandani, CIO of Sun F&C, natural rubber price has registered a fall of around 26 per cent in the last six months. "There is also clear indication that the demand for tyres, particularly from truck segment, is rising as the Government's Golden Quadrilateral project makes further headway. The Government is also looking into the possibility of placing tariff barriers for import of second hand tyres. All these are expected to provide better pricing power to the tyre manufacturers," he added.

According to an analyst with an institutional brokerage, in the last few weeks, some of the truck manufactures have reportedly been facing shortage in supply of tyres.

Mr Devarsh Vakil of Anagram Stockbroking pointed out that JK Industries has increased its prices and the other tyre makers were also considering hiking product prices. "The market is also expecting declaration of a complete ban on the used tyres in the Budget announcement for 2005-06," Mr Vakil added.

Effects of softening of natural rubber prices are expected to be felt in results for the January-March quarter onwards, he observed.

According to industry analysts, demand for high margin redial tyres in the OEM and replacement segments is seen to be rising from the transport sector in view of improving conditions in the highways.

Today stocks such as MRF, Apollo Tyre, Ceat and J K Industries stock shot up on varying degrees on the bourses. The J K Industries counter saw the highest gain of the day at 14.30 per cent. The Ceat stock moved up by 6.42 per cent and attracted some block deals too on the NSE and BSE. The Apollo Tyre and MRF also moved up by 3.96 per cent and 3.28 per cent respectively.

Mr Teckchandani felt that MRF and Goodyear with their market capitalisation at around 33 per cent and 25 per cent of their respective annual turnover figure provide opportunities for re-rating.

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