Tyre stocks on a roll: Three stocks turn multibagger with micro-cap Krypton Industries emerging as top gainer!

‘King Kohli’, was back with his vintage touch. He scored half a century and raised his bat to celebrate.

India recently concluded its Cricket match with Pakistan. Though Pakistan won, there was an important takeaway for Indian cricket fans and that was the fact that Virat Kohli, also known as ‘King Kohli’, was back with his vintage touch. He scored half a century and raised his bat to celebrate. However, wondering why are we talking about Virat and his bat?!  

It is because MRF has a logo on it! MRF is one of the prominent-listed stocks in the tyre segment on the Indian stock exchanges. In this article, we would discuss the performance of tyre stocks in the Indian markets in the last two years.   

On Tuesday, many of the tyre stocks were seen buzzing on the bourses. Stocks like Apollo Tyres and JK Tyre & Industries soared over 6 per cent on Tuesday.   

India’s tyre industry plays a vital role in the auto industry’s growth. As per one of the reports, it accounts for 3 per cent of the manufacturing GDP and 0.5 of the total GDP. Interestingly, India’s tyre industry has doubled in the last one decade. If it didn't excite you, this fact will definitely leave you spellbound! The domestic tyre industry witnessed the highest growth on YoY of 50 per cent in exports at Rs 21,178 crore. Also, it was comfortably higher than the five-year average of Rs 10,480 crore before Coronavirus struck.   

In an investor call of Apollo Tyres, Gaurav Kumar (CFO) said, “During the quarter, we completed our first external assurance of the company-wide water footprint by an independent third party. The results showed 38 per cent use of recycled or reused water in the operations against total water withdrawn. As highlighted in my last call, business teams are working closely with R&D, suppliers, and other stakeholders to increase the usage of sustainable raw materials while in terms of outlook, we expect the demand in India to remain sluggish in the near term, also impacted by seasonality, monsoons, and the prevailing inflation. We expect the demand momentum to remain healthy in Europe. We are cognizant of the recession risks in Europe and are keeping a close tab on the markets as we move ahead.”   

So, let us now move towards the performance of tyre stocks in the past two years: 

All of the eight stocks mentioned above delivered positive returns. Three stocks have turned multibagger ">Multi-baggers, led by Krypton Industries. Interestingly, the book value of Krypton Industries is Rs 19.6 and the stock is trading at a price-to-book value of 1.43 per cent. The other two multi-baggers are JK Tyre & Industries and Apollo Tyres.   

Do you think that tyre stocks have a good prospect in the medium to long term? Let us know in the comments section.