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Tyre stocks kept equity investor portfolios on a high over the past five years. An investment of Rs 2,500 each of the top 10 tyre stocks five years back would have become nearly Rs 1,50,000 today. From the 11-listed tyre segment, eight have more than doubled investor wealth since August 2012 with CEATBSE -0.63 % soaring 1,430 per cent to Rs 1,711 on August 16 from Rs 111.85 on the same day five years back. Shares of TVS Srichakra have soared over 1,000 per cent to Rs 3,372 from Rs 300 during the same period, implying that an investment of Rs 1 lakh in the stock would have become Rs 10 lakh today.
8 TYRE stocks have provided best returns in last 5 years
Analysts say softening rubber prices majorly supported the rally in the tyre stocks all these years. Rubber prices have dropped nearly 30 per cent in the international market in last four years. The Directorate General of Anti-dumping & Allied Duties (DGAA) recently recommended imposition of anti-dumping duty (ADD) at $245-452 per tonne on truck and bus radial (TBR) tyres imported from China, potentially minimising the threat of market share loss to cheaper Chinese radial tyres. The move will further benefit the sector. Coupled with increased transaction cost due to stricter tax compliance post-GST (28 per cent applicable rate on top of 10 per cent customs duty), the ADD could largely eliminate the price differential between India-made and Chinese TBR tyres. “This should lead to a reduction in market share of imported Chinese tyres (currently 15-20 per cent of domestic TBR demand) and could boost volumes for domestic players
Shares of JK Tyre have risen 660 per cent in last five years to Rs 152.40 from Rs 20, while MRF climbed to Rs 65,824 from Rs 10,855. JK Tyre on August 14 posted a consolidated net loss of Rs 117.21 crore for June quarter, hit by an increase in raw material prices in the domestic market. That compares with a net profit of Rs 100.47 crore posted for the same period of the previous financial year. Other tyremakers such as Balkrishna Industries, Modi Rubber, Apollo Tyres and Goodyear India have gained between 100 per cent and 450 per cent in last five years. Shares of PTL Enterprises have jumped 27 per cent, while Kryton Industries slipped 31 per cent in this period.