Shares of tyre manufacturer were in focus in otherwise subdued market with MRF hitting new high of Rs 75,474, up 3.3% on the BSE on Tuesday. The tyre major has surpassed its previous high of Rs 74,499 recorded in December 26, 2017.
Among other tyre stocks, Ceat and Apollo Tyres were up 3%, TVS Srichakra, JK Tyre & Industries, Goodyear India, Govind Rubber and Balkrishna Industries up in the range of 1% to 2% on the BSE. On comparison, the S&P BSE Sensex was trading 0.04% lower at 33,241 points at 10:27 am.
Since February 2018, MRF has outperformed the market by gaining 10% after the company reported better than expected EBITDA margins at 18.5%, up 160 bps QoQ and 70 bps YoY, for the third quarter ended December 2017. The Sensex was down 7.5% during the same period.
Analyst at Anand Rathi Share and Stock Brokers has ‘buy’ rating on MRF with a target price of Rs 80,045 as the brokerage firm expects better revenue growth and stable rubber prices augur well for MRF’s margin expansion in coming quarters.
Government announced increase in custom duty on truck and bus radials (TBR) imports from 10% to 15% in union budget FY19 which augurs well for tyre companies. While incremental benefit will be limited owing to already low imports post Goods and Services Tax (GST) and Anti-dumping duty (ADD); it gives further confidence in sustained depressed Chinese imports, it added.