Home >Markets >Mark To Market >Ceat, JK Tyre shares rise for fourth consecutive session after Q3 results

Shares of Ceat Ltd and JK Tyres & Industries Ltd advanced for the fourth consecutive session after both companies reported better than expected earnings.

Rivals Apollo Tyres, Goodyear India and MRF Ltd rallied between 6-8%. So far this year, JK Tyres surged 75%, Ceat advanced 40%, Apollo Tyres 30%, Goodyear India 5%, MRF Ltd 22%.

JK Tyre & Industries on 21 January reported a consolidated profit of 230.46 crore for December quarter from 10.27 crore mainly driven by increased demand from all vehicle segments. Revenue grew to 2,769.28 crore from 2,199.80 crore a year ago.

Last week, Cavendish Industries, an arm of JK Tyre, reported a 30% year-on-year growth in revenue to 788 crore. Its earnings before interest, taxes, depreciation and amortisation grew 128% to 157 crore.

Tyre maker, Ceat reported a 152% growth in its December quarter earnings to 132 crore. Revenue grew by 26% to 2,221 crore. Ebitda was at 328 crore, up 79%.

According to a recent report by Crisil ratings, tyre sector operating profits are expected to register growth this year, surpassing pre-covid levels, despite lower volume. Higher realisations and benign input prices will help offset the impact of 4-6% volume decline, and enable a 6-8% growth in operating profits for tyre manufacturers in fiscal 2021.

“Improved realisations on account of increased share of replacement demand (to 60% from 58% in fiscal 2020) and exports, which command better prices, will drive the increase in operating profits of tyre manufacturers this fiscal," said Anuj Sethi, Senior Director, Crisil Ratings Ltd.

"Tyre makers have also increased prices in the domestic market after imports were placed on a restricted list in June 2020. The average realisation per tonne of tyres is expected to increase 4-5% this fiscal," Sethi added.

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