Tyre stocks are surging. Know why

Traders ramped up Tyre stocks to fresh 3 months highs after sector giant Ceat Ltd. reported a strong performance for its first quarter earnings.

Ceat said its first quarter net profit jumped 134 percent to 121 crore rupees compared with the year ago quarter. Sales for the same period remained flat at `1,456 crore rupees. Ceat said its Operating margin expanded to 15.9 percent during the April-June quarter compared with 9 percent a year ago because input costs such as synthetic rubber fell sharply.

A better product mix also contributed to higher margins at Ceat.

As a consequence, Ceat gained 3.5 percent to 809 rupees. TVS Srichakra surged 8.6 percent at 2,425 rupees. MRF jumped 4.5 percent 38,121 rupees. JK Tyres added 3.7 percent at 100 rupees. Dunlop India added 3.5 percent at 13.5 rupees and Apollo Tyres added 1.5 percent to quote at 197 rupees.

A global drop in commodity prices have helped an expansion of margins in such companies over the past one year.

(Image credit: Indiatimes)