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An Impressive Performance Of Tyre Stocks In Q3FY13

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How Do I... An Impressive Performance Of Tyre Stocks In Read the Latest Issue of Dalal Street Investment Journal Q3FY13
By Sagar Lele | 2/8/2013 12:28 PM Friday

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Ceat, JK Tyres and MRF announced their Q3FY13 results yesterday (February 7). All these Get in touch to know more about successful investing! companies have shown a robust growth in their revenues and a massive improvement Email inID their : margins. The share prices of Ceat and JK Tyres appreciated yesterday by 5.19% and 1.75% respectively, while MRF announced its results in the post market hours.
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Message : View exclusive research & advice from Dalal Street Although the Indian automobile scene has been subdued over the last few quarters, tyre

stocks were expected to perform well, driven by a demand from the replacement market. The sales to Original Equipment Manufacturers (OEM) have been lacklustre due to the macroeconomic situation, robust sales in the past years have been sustaining the demand for replacement. Moreover, margins have been expected to improve drastically due to the stabilisation of rubber

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have a question. How do I ask? replacement market broadly represents 70% of the turnover of the tyre industry. Although I still Latest Most Popular Market Action Strong Global Cues Cheer Markets The Indian markets opened higher on Thursday amid firm global cues led by gains ... Power Sector Q4 Results Preview Despite the positive decisions taken by the government, the power sector has bee... Index Trends & Stocks In Action For 11th April 2013 The markets finally broke their five-day losing streak to end in the positive ye...

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prices. In Q3FY13, the average price of domestic (Kottayam) rubber of grades RSS-3, 4 and 5 has been Rs 17233.67 per 100 kg, which is 14.85% lower than the average of Rs 20,238.33 per 100 kg, observed in Q3FY12. Easing down of the constituent that comprises of about 45% of the tyre manufacturers cost definitely eases the situation out. In line with the above points, Ceat had a YoY volume growth of 15% in the quarter under review. Revenues grew by 13.33% to Rs 1238.50 crore, on a yearly basis. Margins saw a massive positive growth with the EBITDA margin improving by 268 basis points to 8.93% and the net profit margin going up by 107 basis points to 1.81%. Ceat recently signed an agreement to form a joint venture with A K Khan & Company to set up a tyre manufacturing facility in Bangladesh. This move is expected to further augment the companys performance in the near future. Aided by deeper penetration in the market, particularly in Truck and Bus radials and an additional capacity creation in the same resulted in a revenue growth of 3.06% for JK Tyres. It saw a massive boost in margins similar to that of Ceat. JK Tyres EBITDA margin improved by 369 basis points to 9.18% and the net profit margin saw a turnaround rise of 326 basis points to 1.65%, on a yearly basis. Similarly to its peers, MRF had revenues growing YoY by 5.23% to Rs 3025.75 crore in Q3FY13. At the same time, its EBITDA jumped by 55.92% to Rs 403.1 crore (margin: 13.32%) and the net profit grew by 59.64% to Rs 180.22 crore (margin: 5.96%). There has been a stabilisation of rubber prices at current levels. Also, drastic cost cutting measures have been taken by these companies during times when rubber prices were at the peak. These factors lead to the markets expecting the margins to remain at these levels in the near-term. Moreover, although OEM sales have been low, the replacement market is expected to create a good support for volume and revenue growth. We thus continue to remain bullish on the performance of tyre manufacturers. Find More Articles on: Markets , DSIJ Mindshare, Quarterly Results , Q3 Earnings , Product, Small
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An Impressive Performance Of Tyre Stocks In Q3FY13

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