FINBLAB RESEARCH: TYRE Sector Q4 (Jan-Mar ’18) Numbers And Analysis
Q4 FY ‘18 was a tremendous quarter as far as Indian Tyre Manufacturers and Indian Tyre Sector is concern, thanks to the sinking Raw Material prices (like Natural Rubber and Carbon Black) and robust demand from the automobile manufacturers.
As far as numbers are concern, the profits of all the companies (except TVS) were up in the range of 7% to 40%, while the revenues were increased up to 24% for the quarter ended on 31st March 2018.
The Common Parameter/s for such Performance for the Sector is/are –
The decline in Raw Material prices
GST-led destocking
Implementation of anti-dumping duty on Chinese truck-bus radial (TBR) tyres
Strong demand from the Auto manufacturers
Market Leader Performance –
In Q4 FY ’18 market leader MRF achieved 4.41% quarter-on-quarter (QOQ) growth in Revenues and 20.42% QOQ growth in Profits.
MRF is a leader in the Indian tyre industry with nearly 28% revenue market share.
The company has built up a strong brand since inception and has set up a terrible distribution network which helps in cater to a large number of customers.
Star Performer in the Sector –
The star performer in the sector for the quarter ended 31st March 2018 was Balkrishna Industries.
The company Revenues grew by 23.71% while the Profits were stood at INR 193.62 Cr up by 40.39% as compared to same quarter last year.
Tyre Sector Data –
Sector Outlook –
Indian Tyre companies posted a good set of numbers for the last quarter of FY18 backed by the (1) falling raw material prices and (2) overall good demand from the automobile manufacturers.
Going forward, the sector is likely to benefit most from the GST as well as anti-dumping duty levied on the Chinese truck-bus radial (TBR) tyre. However, raw material price instability is something that the sector has to deal with!
Again the end market looks exciting on the back of normal monsoon this year (IMD predicted) which can offer secular growth opportunities.
Also Read –
1) Finblab’s Valuepick Stock for the month of May – GMM PFAUDLER LIMITED
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