Like every other agro commodity in the world, even the price of natural rubber has seen a spike in the last one year. But given the fact that if demand is growing at a fast pace, higher input cost can be easily passed on to the consumer. That is probably what the tyre industry is going through currently. Despite the fact that natural rubber prices have moved up still the companies have been able to deliver bottomline growth and expansion in margins in the last two quarters. The question is whether the lag effect of rising raw material prices impact the performance of Q4 and subsequent ones or if OEM and replacement demand continue to act as tailwinds?
A continuation of positive momentum is seen in January in tyre sector stocks with JK Tyre and CEAT delivering returns in excess of 18 percent on year-to-date basis alone.
Over the past 15 years, the stock has closed 11 years with positive performance, with CY14 being the standout year with a remarkable rally of 96%, followed by 48% in CY17.
Tyres stocks have been doing very well on the street. The demand from OEM and replacement markets have been strong which is keeping their cash registers ringing. So, the companies which are supplying raw material to tyre companies are also witnessing tail winds. These are B2B players which are into manufacturing carbon black and because they are not consumer facing businesses, these companies don t come into the limelight even when they are doing well.
Following the company s impressive numbers, Apollo Tyres saw a robust start to Wednesday s trading session, with its stock opening at ₹391 per share, a significant increase from the previous day s close at ₹384.10.