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 be attributed to robust growth trends driven by the replacement market, which constitutes more than two-thirds of sales.