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Stocks of tyre companies fell sharply as the final order on ‘alleged cartelisation by tyre manufacturers' is expected to be out soon.
The Competition Commission of India (CCI) which has been probing this said it was in its ‘final stages' to pass the verdict on this issue in the next two to three weeks.
Apollo Tyres closed at Rs 78.15, down 4.30 per cent, JK Tyre and Industries closed at Rs 74.70, down 0.93 per cent and MRF closed at Rs 10,580, down 0.76 per cent on the BSE. Balkrishna Industries also closed at Rs 258.20, down 3.53 per cent.
Price hike adds fuel
“This news from the CCI has triggered the decline in the tyre stocks. Also, overall the auto sector has not been doing very well because of the petrol price hike. Tyre stocks may continue to decline in the next one or two days,” said Ms Madhumita Ghosh, Head of Research, Unicon Financial Intermediaries.
Quarters three and four of FY-12 have been the best for the tyre industry. In November-December, the rubber prices declined and this was very good for the sector.
“Rubber prices are the main reason that these stocks move up or down, because rubber makes up 44 per cent of their overall costs. However, this time the drop in the stocks is only because of the cartelisation report,” said Ms Swati Gupta, Senior Research Analyst, A.C. Choksi Share Brokers
The tyre industry is very well consolidated, as 10 large tyre companies out of 39 account for over 95 per cent of the total tyre production.
priya.s@thehindu.co.in
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