Tyre makers brace for margin squeeze as oil prices soar
SummaryBenchmark Brent crude oil prices have increased by 25% in the last three months to $94/barrel. While domestic natural rubber prices are still lower, international rubber is heading northward. Further, a weaker rupee would translate into higher cost of imported raw materials.
Tyre stocks have been on a roll. Shares of Apollo Tyres Ltd, MRF Ltd, JK Tyre & Industries Ltd, Ceat Ltd and Balkrishna Industries Ltd have gained about 36-71% over the past one year. Tyre companies had hiked prices and input costs were softening, which together meant a sharp expansion in margins. But now, the outlook on both factors has turned adverse.