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Tuesday, Aug 10, 2004

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Tyre stocks race ahead on price increase hopes

Virendra Verma

Mumbai , Aug. 9

SHARE prices of tyre companies increased on Monday's trading on market expectation of possible hike in tyre prices.

Brokers and analysts said there is a possibility of price hike on tyres shortly as the prices of most of the raw materials used in manufacturing tyre have gone up in the last few months.

"Prices of natural and synthetic rubber and the various chemicals used in making tyres are up. Under this situation, tyre companies will have no option but to hike the price," said an analyst with a domestic broking firm.

Stocks that gained in today's trading include - MRF (up 10 per cent at Rs 1,709 on BSE), TVS Srichakra (up 4.16 per cent at Rs 55.05), Ceat (up 4.37 per cent at Rs 38.20), Falcon Tyres (up 6.41 per cent at Rs 20.75), Goodyear (up 5.52 per cent at Rs 37.25) and JK Industries (up 9.33 per cent at Rs 48.05). However, the stock price of Apollo Tyres was an exception as it closed lower. The stock price of the company closed at Rs 201.05, down 1.88 per cent on the BSE.

Brokers said with the hike in tyre price, the companies will be able to maintain the profit margins which were under pressure in the last quarter.

Dealers said the other reason for the interest in the stocks is good monsoon. "Due to good monsoon demand for automobiles is likely to remain firm and this in turn will keep the tyre demand strong," said a dealer with a domestic broking firm. Initially there was concern that the demand for tyres may also slowdown due to weak demand for automobiles. However, this is over to a large extent among the market players after good rains in most part of the country, dealers said.

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