Tyre stocks on the 52-week high road!

By Research Desk
about 8 years ago

Tyre stocks are up in the green today morning, two of them – Balkrishna Industies, up around 6% at Rs.940 after hitting a new 52-week high at Rs.955, being the top gainer on the BSE currently; followed closely on its heels by Ceat, second top gainer, up over 4% at Rs.1306 levels. Apollo Tyres has also hit a new high at Rs.225. JK Tyre also hit a new 52-week today at Rs.153. MRF is at an unbelievable new high at Rs.51486.90.

The reason for this uniform, across-the-board surge for all tyre companies is thanks to a report put out by the Rubber Board of India. It has shown that price of rubber, the main raw material for tyre, which has peaked from Rs.114/kg to Feb to Rs.149 levels in July, once again softened since August. Prices are now at Rs.120 levels . This fall in rubber price makes a huge difference in the profit earning capacity of these tyre companies.

But this party might not last too long as after yesterday’s decision of the OPEC members to cut production of crude in November, we could see price of crude firming up in the days ahead. A high crude price means tyre companies margins could see pressure.