Markets are doing great and everyday we are hearing “top” made stories ,, which I again say is a distant dream . But this post is not related to the broader markets but the Tyre sector . And to be noted here market runs on two factors :- fundamentals and perception of those fundamentals (sometimes euphoria and sometimes panic ). And for shorter terms prices are influenced by the perception .
That perception for Tyres Industries is going to be very very positive . The factors : rubber prices have topped , crude is not running away– this on the cost side. On the demand side I am seeing auto industry doing great and in coming days will be doing greater .
Without elaborating so much I have told in nutshell why should the Tyres shine bright . Now combining the Fundamentals with the perception of fundamentals and with my experience on what to expect because of that I strongly see 50% plus upside in Tyre stocks by Nov-Dec when traditionally auto sales start decelerating.
To be specific MRF(cmp 33800)–it’s my favorite , CEAT(cmp 864) and JKTyre (cmp 89) is must have for the coming months and expected levels should be MRF: 44000-55000 ,, CEAT 1260-1400,, JKTyre 140-160 before Nov-Dec 2016(lol I am mentioning year for there to be no confusion).
And I must mention here like Maruti post which was posted in Sep 2014 these targets are for traders for Investors CEAT and JKTyre can be the kind of stocks one dreams to have in portfolio with 5-10x kind of returns in coming years as any fool can be negative on Auto sector of India which is growing at fastest pace (currently at no 5 in the world which I expect to come to no 3 very soon).
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