In this edition of Ideas for Profit, Moneycontrol's Sakshi Batra finds out how these tyre makers have managed to cushion the shock from coronavirus and whether they make good bets for the long-term.
Though sales of CEAT, Apollo Tyres and MRF got hit by the pandemic, the impact was less compared to other auto ancillary companies because of replacement demand
The company's other income was down to Rs 43.9 crore against Rs 105.8 crore in the year-ago period.
The operating profitability of companies such as CEAT, Apollo Tyres and MRF improved significantly due to the sharp decline in raw material (RM) prices.
The Apollo Tyre’s stock is trading at a valuation discount compared with MRF and CEAT
For 2019-20 fiscal, the company posted a consolidated net profit of Rs 1,422.57 crore as against Rs 1,130.61 crore in 2018-19, it added.
The tyre industry has been facing market demand problems emanating from the crisis that the automobile sector has been confronting for some time, the company said.
"In view of the nationwide lockdown for a period of 21 days, the operations of our head office, sales offices and plants across India will remain shut until the lockdown is lifted," MRF Ltd said in a regulatory filing.
Revenue from operations stood at Rs 4,007.63 crore as against Rs 3,946.77 crore in the same period a year ago, a growth of 1.57 percent.
Net Sales are expected to increase by 2 percent Y-o-Y (down 3.5 percent Q-o-Q) to Rs. 3,932.7 crore, according to Kotak.
Though SIAM has predicted a muted growth for FY20 for most of segments, tyre companies are upbeat on volume outlook.
The agitation, which began on February 8 over demands for wage revision and removal of CCTV cameras from certain areas, ended on February 25.
The Tiruvottiyur factory is one of the nine factories that MRF currently operates across the country.
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Macquarie upgraded Cadila Healthcare to 'Outperform' from'Neutral'.