JK Tyre & Ind may see a decent upside, says Rajen Shah

JK Tyre & Ind may see a decent upside, says Rajen Shah
December 23, 2011





JK Tyre & Ind may see a decent upside, says Rajen Shah, CIO, Angel Broking.

Shah told CNBC-TV18, “Midcaps have been battered like they are never going to come up and there is lot of value in many companies. In tyre industry, what I have observed over the past three months all these companies whether it is Apollo Tyres , MRF , JK or Ceat, managements of these companies have been buying shares by creeping acquisition. The most aggressive has been Ceatand then we have JK, Apollo and MRF; a conservative management like MRF has started buying though small quantity 1000-1500-2000 shares but Ceat has been very aggressive. I think days of rubber and crude are number; rubber which was at Rs 240 a kg is down to about Rs 195-200 and I think its going to come down even further and on a sharp drop of 10-15% rubber could see this company’s bottomline zoom up.”

He further added, “One indication is that management buying itself is a good sign of confidence and rubber I personally believe that it should come down to about Rs 175-180 levels and I think that will see this company doing extra ordinarily good in 2012-13. The promising one which we feel amongst all this though Apollo is also reasonably fine at this point of time but we find lot of value in JK Tyres. If you see Apollo or MRF or these two companies the turnover this year would be 10,000 crore and they are at a market cap of about 3,000 crore so their market cap is 0.3 whereas if you see JK, the turnover this year will be 6,000 crore but the market cap is Rs 250 crore.”

“I was in Delhi about a month back and interacted with the management of JK and somehow I got the feeling that this company is quoting at 1/4th the replacement cost, they are setting up a plant in Chennai and pumping 930 crore where the market cap of JK itself is 250 crore and we too remind ourselves that two years back this very company reported about Rs 40-45 kind of earnings. So I don’t see any reason why this should not get repeated in 2013-14 when the Chennai plant will be fully operational. I think tyre industry certainly offers a decent upside.”





Market on Dec 23: Spot rubber shows mixed trend
December 23, 2011





KOTTAYAM, DEC. 23:

Physical rubber prices showed a mixed mood on Friday. The market appeared to be in a holiday mood with only a couple of days to Christmas and hence most of the participants were reluctant to make any new commitments. The volumes were narrow.

Sheet rubber weakened to Rs 200 (201) a kg according to traders. The grade slipped to Rs 200.50 (201) a kg both at Kottayam and Kochi as quoted by the Rubber Board.

In futures, the January series improved to Rs 204.55 (202.86), February to Rs 206.50 (204.70), March to Rs 209.30 (207.36), April to Rs 213.90 (212.78) and May to Rs 214.50 (213.20) a kg on the National Multi Commodity Exchange (NMCE).

RSS 3 (spot) dropped to Rs 178.92 (179.15) a kg at Bangkok. The Tokyo Commodity Exchange remained closed owing to “The Emperor’s Birthday”.

Spot rates were (Rs/kg): RSS-4: 200 (201); RSS-5: 196 (196); ungraded: 190 (190); ISNR 20: 191 (190) and latex 60 per cent: 110 (110).