Tyre stocks on a roll. JK Tyre soars 27% in 2 days, Ceat hits 52-week high
24/10/2020
Mumbai, oct 23: Shares of tyre companies were on a roll for the second straight day with JK Tyre ralling 27 per cent in past two trading days, after the company reported a strong operational performance with margins hitting a four year high of 15.6 per cent in July-September quarter (Q2FY21).
At 01:29 pm; JK Tyre & Industries was trading 10 per cent higher at Rs 76.70 on the BSE. Volumes jumped over five-fold. A combined 9.5 million equity shares have already changed hands on the counter on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.40 per cent at 40,721 points.
In Q2FY21, JK Tyre reported profit before interest depreciation and tax (PBIDT) of Rs 367 crore as against Rs 303 crore in the corresponding quarter of the previous fiscal. Consolidated revenue from operations rose 5.6 per cent to Rs 2,275 crore from Rs 2,155 crore in the year-ago quarter. Net profit, however, declined 38 per cent year-on-year (YoY) to Rs 105 crore, primarily due to the low effective tax rate in the base quarter. It had posted a profit of Rs 170 crore in Q2FY20. The management said the profitability during the quarter improved significantly due to aggressive cost-cutting, more particularly fixed costs. The company could achieve savings in interest costs due to its ability to reduce its working capital requirements, it said. The optimism was seen on the other tyre counters as well as traders expect the upcoming festive season to help buoy demand further.
Among the other tyre stocks, Ceat hit a 52-week high of Rs 1,136 soared 5 per cent in intra-day trade on Friday. The stock surpassed its previous high of Rs 1,101 touched on February 20, 2020. In past one month, Ceat has outperformed the market by gaining 23 per cent as against 8 per cent rise in the S&P BSE Sensex.
Apollo Tyres, too, rallied 5 per cent to Rs 149 on the BSE today. Analysts at ICICI Securities expect the company to report a healthy performance in the September 2020 quarter, primarily tracking robust replacement market demand both in India, Europe amid benign raw material prices. MRF and Balkrishna Industries gained around 2 per cent each on the BSE.
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