Business News›Markets›Stocks›News›Tailwinds are winning, beneficiaries of strong OEM & replacement demand from auto sector: 5 tyre stocks with upside potential of up to 38%
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Tailwinds are winning, beneficiaries of strong OEM & replacement demand from auto sector: 5 tyre stocks with upside potential of up to 38%
Synopsis
It is a well known fact that if demand is growing at a fast pace, higher input cost can be easily passed on to the consumer. That is probably what the tyre industry is going through currently. Recently there was an increase in natural rubber prices and fears were expressed that margins might come under pressure. But two things happened just recently, the natural rubber prices corrected and the whole of the tyre stocks witnessed a sharp rally. While the risk of headwind in terms of higher input cost stays, will the OEM and replacement demand act as tailwinds and continue to power the stocks.
Like every other agro commodity in the world, even the price of natural rubber has seen a spike in the last one year. But in the last few weeks they have slipped sharply. This will bring relief to tyre companies where the higher input cost has been putting some pressure on margins and to some extent taking the full benefit of strong OEM and replacement demand. The fact is that all segments of the auto industry are doing extremely well and tyre
ETMarkets.com
10 mins read
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