Slipping rubber prices to aid tyre cos
Rubber prices fell to around Rs 76 levels on Wednesday, a decline of nearly 15% over the past one month.
By TNN |
Falling rubber prices could provide some relief to beleaguered tyre stocks, which have not been on investors’ radars for some time now. Rubber prices fell to around Rs 76 levels on Wednesday, a decline of nearly 15% over the past one month. Commodity analysts attribute this to higher physical stock, slowdown in exports and higher production.
They expect this slackness in price to persist because of the monsoon. Dealers believe this is likely to boost the bottomlines of tyre companies. However, sceptics are of the view that the current slowdown in the auto sector may offset gains accruing from lower rubber prices.
Also, typically, there is a six-month time lag between drop in raw material costs and the resultant impact on the company’s bottomline. Apollo Tyres shares ended marginally lower at Rs 311.10, MRF at Rs 4010, up 6%, CEAT at Rs 147.55, and JK Tyres and Industries at Rs 131.70.
They expect this slackness in price to persist because of the monsoon. Dealers believe this is likely to boost the bottomlines of tyre companies. However, sceptics are of the view that the current slowdown in the auto sector may offset gains accruing from lower rubber prices.
Also, typically, there is a six-month time lag between drop in raw material costs and the resultant impact on the company’s bottomline. Apollo Tyres shares ended marginally lower at Rs 311.10, MRF at Rs 4010, up 6%, CEAT at Rs 147.55, and JK Tyres and Industries at Rs 131.70.
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