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VCK Share & Stock
Kesoram Ind (Buy)
CMP: ₹65.95
Target: ₹93
Kesoram Industries has suffered due to doubling of natural rubber prices, low demand for bus and truck tyre, lower operating leverage and high financial leverage. However, things have started to improve with the correction in natural rubber prices, which has corrected to ₹155/kg compared with a high of ₹230/kg. With this correction, the tyre segment has started to report positive operating profits. The company has also tried to address the high debt level through ₹405-crore rights issue and reduction in working capital requirement. Given the steep correction in the stock price and equity dilution issue already being addressed, we are positive on the company from valuation point of view.
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