Here's why tyre stocks like Apollo, JK Tyre, MRF will be in focus

Shares of tyre companies like Apollo Tyres Ltd., MRF Ltd., JK Tyres Ltd. will be in focus after the government extended the Countervailing Duty on new, unused pneumatic radial tyres till July 23, 2024.

The government had first imposed this duty in June 2019 for a period of five years, which means that this extension has been granted for a period of one month.

A countervailing duty (CVD) is imposed by a country intending to offset the price impact of significant foreign government subsidies on a product or goods.

Pneumatic Radial Tyres with a nominal rim diameter above 16 inches are used in buses, lorries and trucks.

Additionally, channel checks carried out by brokerage firm Nomura suggest that prices for truck, bus and radial (TBR) tyres have been cut by ₹500 to ₹800 per pair. For companies like Apollo Tyres and JK Tyres, the price cut is in the range of 1.5% to 2%.

Nomura wrote in its note that the price cut by Apollo Tyres and JK Tyre came in response to a similar price action carried out by MRF.

This is the second instance of price cuts, which has taken place only in the TBR segment, Nomura wrote.

Between July and September 2023, prices were cut by 1% across both TBR and truck bus bias (TBB) segment.

Shares of JK Tyre have corrected by over 9% in the last four trading sessions, while those of Apollo Tyres are down for three days in a row, having corrected 6% during this period.