Tyre stocks raced ahead on May 21, led by JK Tyre’s robust quarterly results. Stable input costs and margin hopes keep outlook bright
Brent crude prices hit a three month high amid expectations that recent US sanctions on Russian oil producers will disrupt Russian crude supplies to major importers--China and India.
Crude oil prices affect the paint business and tyre industries are they are raw material-intensive industry. Rising crude oil rates also increases the cost of producing items.
Oil marketing companies (OMCs), including HPCL, BPCL, and IOCL, which had initially been trading positively, gave in to profit booking, with shares slipping by nearly 2 percent.
The company reported 56 percent year-on-year (YoY) increase in consolidated net profit to Rs 169 crore in Q4FY24, driven by upbeat demand
As the tyre industry uses crude oil derivatives for manufacturing synthetic rubber, tyre stocks will remain in focus as a rise in crude price will hit their margins.
The popular strategy is to sell at the start of the session and then cover the positions in the second half
Nomura is cautious about tyre stocks as a sharp jump in natural rubber prices poses a threat to the margins of companies in the tyre sector.
Kotak Institutional Equities and Motilal Oswal Financial Services have maintained their ‘sell’ rating on India's largest tyre manufacturer--MRF.