TYRE Sector
Q3 (OCT to DEC) – FY 2017-18 was a quarter as far as Indian Tyre Manufacturers and Indian Tyre Industry is concern. Click here to see Q2 Results.
For the numbers, the revenues of all most all the companies were up in the range of 7% to 23%, while 3 companies out of 5 able to register growth in profits and 2 fails to do so as compared to same period last year.
The Common Parameter/s for such Performance for the Sector is/are –
Strong demand from the domestic markets as well as OEM
Market Leader Performance:
Market leader MRF has registered 6.56% growth in Revenues and 18.19% growth in Profits as compared to the same period last year.
Star Performer in the Sector:
The star performer in the sector for the quarter ended 31st December 2017 were MRF, Balkrishna Industries, and ApolloTyres where the companies Revenues grew upto 23%, while Profits grew upto 18% as compared to same period last year.
Here is the Data –
Future Outlook –
Q3 (OCT to DEC) was a good quarter for the Indian Tyre Companies thanks to the strong demand from the domestic market. Generally Q3 has been good for the Indian Tyre Industries since it is a that period of the year where monsoon season gets over and demands is always there.
Post implementation of the anti-dumping duty in September 2017, Chinese truck bus radial tyre imports declined to the 50,000 level from a peak of 140,000-150,000. This has augured well for players as is evident from the volume growth registered by the player in the industry.
After studying the results and from the management commentary one thing clear that upcoming quarter or years are likely to be good. Almost all the companies have invested heavily in some projects or the other. Let see
- MRF: Robust revenue growth can be attributed to its exclusive dealer network strength, which transitioned well, and strong OEM sales on the back of surge in PV sales.
- Balkrishna Ind: (1) Company planning to repay entire debt on books by August 2018. (2) In order to ensure raw material security and scaling up of capacity utilization of its Tyre manufacturing capacity, Balkrishna Ind is setting up a carbon black plant with capacity of 60,000 MT per annum in Bhuj (Gujarat). The plant is expected to commence operations in FY19.
- Apollo Tyre: The company will invest 20 billion on a greenfield PCR plant in AP in phase-I.
- CEAT: The Board has approved an additional investment of INR 706 Cr towards capacity expansion of greenfield project for passenger tyres. Aggregate amount to be invested increases to INR 3,506 Cr (up till FY22).
Thing that may threaten Tyre Industry are (1) higher Raw Material prices, and (2) higher Crude Oil prices
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