Tyre Sector Leaders - The Future Prospects

Dear Peers,

In the past 2/3 years the Tyre sector leaders as MRF, Apollo Tyres, Ceat, JK Tyre, TVS Sri are scaled up well (exclusions: Balkrishna, Good year). What about the future prospects at least for the next 2/3 years - Please respond.

Thanks
Kris

 

TVS Sri and Balkrishna are worth looking into

 

The main issue coming up is the issue of China dumping. Chinese tyres are invading the replacement market which is about 50-60% of Indian tyre co. revenues. Right now there is little protection from the govt. in terms of import duty. I like JKT, in terms of valuations and the new plants they have invested in (from Kesoram inds) which gives them entry in the 2 wheeler segment.

 

The precise reason why i suggested TVS Sri and Balkrishna.

Both are largely insulated from the chinese onslaught.

 

@Sachin pathak how are they insulated from the chinese dumping? Do you have a link of the material which suggests this?

 

@Dinesh

Balkrishna Industries is a leading manufacturer in the off-highway tyre market, with a share of 6%. It is a different segment as against the general tyre industry. Operations are in a large-variety and low-volume segment. The specialty tyres are meant for segments such as agricultural, industrial, material handling, construction, earthmoving, port, mining forestry, lawn and garden equipment and all terrain vehicles. Around 85% of the revenues come from exports. Products are marketed in 130 countries through a network of national distributors. There are four subsidiaries in Europe and North America, primarily engaged in sales and marketing activities.

Chinese dumping is in the PV and CV segment. Also its almost entirely export oriented so minimal impact of dumping in local markets

 

Srichakra - if i recollect right the managment interview following Q1 had this mentioned. Will try and pull out any transcript if i can find it

 

Here you go.....

https://www.moneycontrol.com/news/r...rts-dont-impact-co-tvs-srichakra_2524461.html

Not sure if this is still relevant with passage of time and the yuan deval subsequently

 

Balakrishna industries figured in the Capital Market (oct12-oct25) cover story titlec ' one of their kind' companies.

The list had names like : eicher, gruh, atul auto, bata, essel propack, godrej properties etc besides balkrishna

 

interesting. Thanks!

 

This is good info Sachinji, noted the same ... Thank you!
Regards, Kris

 

It is been noted that the favourable situation in raw material cost is not benefited the company and share holders as it should be!!! natural rubber prices fell drastically and crude as well. What is going wrong with tyre companies?

 

@ ajay

Common sense should tell you : given that fall in input costs (raw material) is well known to even small time investors, it is also know to consumers / clients of tyre companies and they arent fools to allow tyre companies to sit on any additional profit on this account.

Add to this is the impact of chinese dumping, where tyres are available at even lower than cost of production in india with china even resorting to dumping at a loss given overcapacity there

 

Chineese tyres may be cheeper which indian tyre reduced prices? If this is the situation it is not a good idea to invest in tyre companies for long term!!!!, if the raw material cost is increasing in one or two years what will the future of tyre companies other than major players in this field ?

 

Its not as bad as you make out it to be.....

Chinese imports are a threat.... But it impacts replacement market. Also the tyre companies are coming out of a stint of bad business cycle with the auto revival and ecomomic reform agenda and infrastructure push. The market is big enough for each player to improve over its immediate past few years.

Also there are names in here which may not be impacted by chinese imports. So if you see right upfront of the various names that were listed - i picked up two names - balakrishna and srichakra : precisely for these reasons

 

i made some profit from JK tyres and exited just after split

 

Good. Not sure about your exit. I hold appollo and balkrishna

 

Srichakra came to my notice post q1 but i missed the bus - put the stock on a watchlist...saw it go down by upto 13% but just didnt get around to buying it then. Its recovered all that lost ground and even inched up a bit more