Expect further rally in tyre space from curent levels: P Phani Sekhar

In a chat with ET Now, P Phani Sekhar, Fund Manager-PMS, Angel Broking, shares his views on Tyre sector.

ET Now: Do you think there is significant run up even left in the tyre pack considering they have already zoom so much?

P Phani Sekhar: Even without the raw material advantage tyre stocks were in a sweet spot because the tyre industry was at all time low or a five to six year low. The prospect of recovery in OEM volumes has improved the sentiment around the tyre companies.

Another vital component of the raw material complex, which is crude dropping very sharply, so that will add that much more to the margins while the topline is expected to grow over the next two years and remember that many of these companies have built capacities during bad times, so from 2010 to 2013 they went through a very rough patch because they were in the middle of their capex programme, rubber was hitting all time highs every week and many of these stocks were simply battered but now the tide has turned and it is a complete 360 degree and now you are seeing many of these stocks gain both on the top line and on the margin front, so I expect wonderful rallies even from these levels.