WILL APOLLO TYRE & J.K.TYRE BE RE-RATED?
Apollo, JK Tyre may see re-rating
Tyre stocks, including MRF, CEATBSE 2.63 % and Balkrishna, have gained 45-70 per cent in six months due to high earnings visibility and consumer nature of the business. These stocks now trade at 18-23 times their earnings. Other tyre stocks such as JK TyreBSE 1.42 % and Apollo TyresBSE 0.12 % are still trading cheap and appear to be due for re-rating.
Of this, JK Tyre is the market leader in the commercial vehicles (CV) segment with 28 per cent market share and derives 80 per cent of revenue from the segment. The government's focus on infrastructure development is expected to boost the demand in the CV segment. Good monsoon and better rural income, too, could boost demand for light CVs.
Another positive for JK may be the possibility of lower Chinese tyre dumping after GST. JK is perceived to be the most vulnerable to Chinese tyres due to higher exposure to commercial vehicle segment where consumption of Chinese tyres is higher.
Courtesy: See More @ http://bit.ly/2sZlbtm
Tyre stocks, including MRF, CEATBSE 2.63 % and Balkrishna, have gained 45-70 per cent in six months due to high earnings visibility and consumer nature of the business. These stocks now trade at 18-23 times their earnings. Other tyre stocks such as JK TyreBSE 1.42 % and Apollo TyresBSE 0.12 % are still trading cheap and appear to be due for re-rating.
Of this, JK Tyre is the market leader in the commercial vehicles (CV) segment with 28 per cent market share and derives 80 per cent of revenue from the segment. The government's focus on infrastructure development is expected to boost the demand in the CV segment. Good monsoon and better rural income, too, could boost demand for light CVs.
Another positive for JK may be the possibility of lower Chinese tyre dumping after GST. JK is perceived to be the most vulnerable to Chinese tyres due to higher exposure to commercial vehicle segment where consumption of Chinese tyres is higher.
Courtesy: See More @ http://bit.ly/2sZlbtm
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