Tyre stocks in limelight

Currently of the top five gainers on the BSE, three are from the tyre sector – Ceat, JK Tyre and Apollo Tyre are all up in the green. Apollo Tyres hit a new high at Rs.338.45.

All tyre stocks, which were reeling under high raw material prices, got some respite, what with prices of crude oil and rubber, both key raw material components for these companies – makes up 70% of the total cost structure, fell to a multi-year low.

Natural rubber prices have declined 24% from their peak in April’22 and domestic rubber prices are down 22%. Crude price too has declined.

A fall in raw material prices plus good increasing volumes means higher EBIDTA margins for the tyre companies.