Shares of JK Tyre and Industries Ltd (JK Tyre) rose sharply on Monday to trade near their 52-week high of Rs 197.50. The stock jumped as much as 10.50 per cent to hit a day-high level of Rs 191, just 3.29 per cent shy from its one-year high hit in mid-September this year.
A total of 6.12 lakh shares changed hands today, amounting to a turnover of Rs 11.38 crore. The company’s market capitalisation (m-cap) stood at Rs 4,678.39 crore.
Experts largely remained positive on the stock on account of strong demand in the automobile sector and the tyre maker’s plan to expand its production capacity.
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Pavitraa Shetty from Tips2trades, “A crack in crude oil prices thereby having a positive impact on tyre companies coupled with the company’s plans to expand its production capacity has led to a sharp uptrend in JK Tyre. Rs 198 remains a strong resistance on Daily charts. A close above this level should lead to Rs 210. Support will now be at Rs 170-173 zone.”
Foram Chheda, CMT, Technical Research Analyst and founder at chartanalytics.co.in., said, “JK Tyre stock has been consolidating in a price pattern of a symmetrical triangle, a breakout of which could trigger a meaningful up move on the counter. At current levels, there is an attractive buying opportunity with a favourable risk-reward ratio. The stock price has been consistently taking support near the 50-day moving average, which indicates the underlying trend to be bullish. Relative Strength Index (RSI), being a lead indicator, broke out from the downward sloping trend line that can have potentially bullish implications.”
He suggested buying the stock above Rs 170 for a target price of Rs 183 with a stop loss of Rs 164.
Commenting on the tyre industry, Ashwin Patil, Senior Research Analyst at LKP Securities, said the sector “looks comfortably positioned going forward with auto demand looking strong, especially in the PV (passenger vehicle) and CV (commercial vehicle) segments.”
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“Replacement demand too remains robust on the back of strong demand in FY19 considering the fact that the tyre replacement cycle on average is about 3-3.5 years. On the profitability front, we believe that softening of natural rubber and crude prices shall augur well for the tyre sector. Operating leverage as well shall come into the picture as capacity utilisation levels — which had dropped in the last two years — should normalise. Debt and capex levels also should be moderate in the coming years. The sector looks positive to us,” he stated.
Meanwhile, Indian equity benchmarks extended their gains for the fifth straight session to scale fresh record peaks in today’s session.
