Finblab Research: TYRE Sector Q1 (Apr-Jun ’18) Numbers And Analysis
Q1 FY19 has been a spectacular quarter, as far as profitability is concern, for the Indian TYRE sector. All most all the companies have registered a superb performance during this period – many thanks to the increasing demand from the OEMs, as well as, in the replacement market.
Common Parameters for Such Performance for the Sector Are –
Stable Crude Oil prices
Range bound natural rubber prices
Strong demand from the Auto manufacturers
Market Leader Performance:
For the Q1 FY19, India’s largest tyre manufacturer MRF Limited (MRF) reported lower than expected numbers.
Standalone revenue for the company was down almost 3% YoY (flat QoQ) at INR 3,855.55 Cr, lower than the consensus estimate of INR 4,069 Cr.
Standalone profit after tax (PAT) was up 145% YoY (25% down QoQ) at INR 261 Cr again missed the consensus estimate of INR 368 Cr by a wide margin.
MRF is a leader in the Indian tyre industry with nearly 28% revenue market share.
Star Performer in the Sector:
Balkrishna Industries, Apollo Tyres, Ceat, and JK Tyres are the star performer for the sector for the quarter ended 30 June 2018.
The above-listed companies have registered Revenues growth of 15% to 35% for the April to June 2018 quarter while the Profits were increased by 50% to 307% for the same period.
Tyre Sector Data –
Outlook –
The management of various companies are of the view that growth momentum will continue in days to come despite the challenges posed by the raw material cost, transporters strike in some part of the country, and the new loading norms for commercial vehicles.
Again the market of TYRE industry looks exciting on the back of a good monsoon this year, which can offer secular growth opportunities going forward.
Finblab’s Pick of the Sector –
1) Balkrishna Industries Ltd : 32.35% Returns in just 5 Months
2) Ceat Ltd : 13.85% Return in just 40 days
Also Read –
1) Finblab’s Valuepick Stock for the month of August 2018 – Meghmani Organics Ltd
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