Tyre, footwear stocks sizzle on fall in rubber prices

Riken Mehta 
moneycontrol.com

Follow me on Twitter @mehtariken 

Shares of tyre and footwear companies have rallied over the last three months on weakening rubber prices. Rubber prices crashed to a 3 ½-year low last week on heavy imports by local tyre companies. Domestic farmers held back their stock in anticipation of higher rubber prices. However, tyre companies went in for import of cheaper rubber from the international market, which led to 18 percent drop in domestic spot rubber prices of RSS-4 since September 1, this year. The raw material cost as percentage to total sales for tyre companies is in the range of 60 to 70 percent. The operating margins of tyre and footwear companies are likely to improve significantly on fall in raw material prices. 

% Gain: Stock movement from 2nd Sep to 29-Nov 

Raw material to sales % and OPM% figures are FY13 figures 

EPS (TTM), BV latest. Tyre Stocks

Company Name  RM To Sales % OPM%  % Gain  EPS  P/E  BV per Share  P/B
Ceat Ltd. 68% 9.01% 172% 59.02 4.86 207 1.4
J K Tyre & Inds. Ltd. 69% 9.21% 85% 30.35 5.24 181 0.9
T V S Srichakra Ltd. 58% 5.75% 73% 59.92 4.87 223 1.3
Balkrishna Industries Ltd. 57% 20.82% 29% 38.22 7.47 147 1.9
Apollo Tyres Ltd. 58% 10.52% 27% 7.24 11.19 46 1.8
M R F Ltd. 70% 10.64% 27% 1845.89 9.36 6738 2.6
Goodyear India Ltd. 55% 6.12% 24% 35.8 10.43 153 2.4
Footwear stocks (Leather and rubber are basic raw materials)
 

Company Name RM To Sales % OPM%  % Gain EPS  P/E BV per Share P/B
Bata India Ltd. 16% 14.93% 30% 29.39 36.61 109 9.9
Liberty Shoes Ltd. 42% 8.05% 24% 6.21 15.56 92 1.1
Relaxo Footwears Ltd. 43% 10.87% 22% 8.78 20.16 36 5
Mirza International Ltd. 38% 17.95% 17% 5.38 4.44 27 0.9
Rubber products
 

Company Name RM To Sales % OPM%  % Gain EPS  P/E BV per Share P/B
Indag Rubber Ltd. 69% 14.44% 52% 52.17 5.18 155.54 1.7
Rubfila International Ltd. 74% 14.81% 21% 2.56 8.36 11.82 1.8
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