Tyre stocks on the 'high'way!

Ceat has been stuck at the “top gainer” slot since the morning today; hitting an over 4-year high at Rs.1516.15, it has gained huge considering it had hit a new low in June’22 at Rs.890.

The stock price surged after the management said in a TV interview that it expects strong demand, better margins and robust capex in the coming years.

The company expects demand to be stable as the OEM sector and the replacement sector is doing well though exports remain a weak spot.

Then company said that the benefits of the lower raw material cost plus the higher selling price will start reflecting from Q3FY23. It expects current Q1 to be a lot better than previous Q1 with EBITDA margins at 10-12% v/s 6% (YoY). Also once its debottleneck exercise is done, with expansion expected to stay on course, revenue will jump up sharply.

With rubber prices cooling off company will see benefits on its bottomlines starting H2FY23.

This commentary from Ceat has percolated to other tyre stocks too with Apollo Tyres also hitting a new high today at Rs.300.80; so did MRF at Rs.93,887, Goodyear India at Rs.1182.75 and JK Tyre at Rs.188.80.