The Indian Stock Market has stocks listed from different domains/sectors.
One of the prominent sectors: The automobile sector that has the following under its ambit
- Auto Manufacturers
- Auto Ancillary
- Gear & Axles
- Electronics etc.
Now let us focus on Tyre Industry
The Industry Leaders are – MRF, Balkrishna Industries, and Apollo Tyres
They have a vivid customer, manufacturing, and supply base which moves across continents
One of the smaller companies is JK Tyre & Industries. The stock performance for the past year is as follows:
The stock has given a return of ~100%
Considering this, is it worth investing in it?
Let us delve further into it
- JK Tyre Focusses on Commercial(Bus/Truck), Retail(Passenger Car/ Motor/Scooter), Farm, Three Wheeler, Retread Tyre Market
- Its EPS(Earning Per Share) & Book Value has been Increasing Year on Year(Y-O-Y)
- It is one of the few stocks with a P/E ~ 10 (which makes it a value buy)
- No share pledge by the promoters
- There are some red flags
- Promoters are decreasing their shareholding (shows lower confidence in the business)
- Margins will be under pressure as maintaining them will be difficult considering an increase in commodity prices and competition
- There has been a downgrade in rating by India Ratings and Research (Ind-Ra) with the outlook as negative (This makes borrowing expensive)
Considering all this, I would be cautious at entering at these levels and would like to wait out and see the management action prior to holding it in my portfolio
Hope you find this helpful
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