TVS Srichakra - Mini MRF!

Tyres would be manufactured as per demand. If airless tyres are adopted, the direct threat would be for tyre bead wire companies like Rajratan Global.

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TVS Srichakra Limited announces the nationwide launch of its brand TVS Eurogrip targeting needs of millennial customers

I would assume when they said they’ve researched “the millennials” well, they’d be talking about the kinds of vehicles they use, frequency of use, speed / acceleration etc and that they’d come up with tyres suiting those specific needs.

But the Slide 11-14 are extremely vague and I’d dare say even unnecessary. If I didn’t know any better, I’d say this is just a marketing ploy for their new venture.

It remains to be seen just how much resources will be spent on this and what kind of returns it will make.

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No matter how much the tyre companies try to brand themselves, I personally doubt if it registers with the customer. When you buy a car, which tyre the car comes with is never a factor in your purchase. Some years back, when I had to replace the tyres of my car, I simply bought the same brand which the OEM had originally used. After all, the OEM knows what is best. I am not sure how many people are discerning enough to differentiate between Tyre A and Tyre B. At times, the dealer may also have a large influence on the buyer’s decision if a buyer walks in with an unsure mind. But the dealer’s choice will be driven by where he gets the highest commission, or where he wants to clear his inventory.

Primarily, tyre stocks remain a commodity play – the cyclicality of rubber (i.e. crude) prices largely determines the fortunes of tyre companies. Add to that the cyclicality of automobile sector, import tariffs and so on.

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Now Tyre industry is slowly recovering - anybody done detailed analysis on Srichakra?

Looking at margins for the last decade may give some idea. Commodity players cannot get premium margins. One company does stand out due to geography and another due to strategic positioning.

The competitive intensity is still severe due to capex done by most player in recent few years. On the other hand, auto demand is yet to pick up.

These companies are also susceptible to changes in the raw material prices (specifically rubber). Still worth tracking closely due to clean balance sheet and strong parentage but until growth comes back, it is difficult for such businesses to get re-rated.

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anyone actively monitoring this company? Just curious what is causing the spike in the company’s market valuation? No results and their company website is broken, so could not find anything on their investors sections…any really positive updates ?

Stock move Up: Company was available for 750 crores and now it has jumped to 1125 Crores - Close to 50% uptick in less than one week. is there is a big player who has purchased this company?
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It could be a sentiment driven rally due to the “car and bike” survey which forecasted that 73% of people surveyed plan to buy a bike after lockdown opens. Moreover as soon as the TVS srichakra plant opened it witnessed a high demand for its existing tyre stock. Could be the reason why Hero motors also opened gap up.

Hi All,

Kindly excuse me for posting this here : Has anyone noticed Birla Tyres? The stock has been continuously running for past 2 months and has clocked 400%

Am not finding any reasons for this, are there are any rally for tyre company?

Kindly delete this post if its irrelevant here…

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Hi,
I think, Birla tyre is a spin off from Kesoram ind. It is a loss making and small company with debt on its balance sheet.
However, companies all negative has been factored in. So, most probably people are buying because promoter looks now serious to grow the bussiness. Since it is a very small company, with strong promoter and very small base, it is looking multibagger stock in making (hope): but numbers has to follow.
Price till now has not increased because of company performance but because of people are willing to pay more in hope of multibagger in next five year and it has very small equity.
Thanks!

Could you please share some point on Birla Tyres regarding Debt on book, earning, revenue, EBITA margin, etc.
For penny stock, it is very much likely that stock prices either go continuous UC and LC !

Hi,
I have gone through the bs of keshoram, where you will get its detail.

Sorry I have gone when spin off took place few month back but I don’t remember anything. Because at present it is pure speculative play and I was not interested after seeing lot of debt and no or negative profit.

I own TVS and comment about Birla tyre was put here, so Whatever I was knowing I have put.

Thanks!

The Directorate General of Foreign Trade (DGFT) vide its June 12 notification has placed import of major tyre categories in the ‘restricted’ category from the earlier ‘free’ category. It has not, however, imposed any additional duties on these tyre imports. The development implies that tyre imports would now require DGFT permission vs. no restrictions earlier.

“As per industry sources, imports serve around 4 per cent to 5 per cent of domestic consumption. Owing to small scale of tyre imports, we feel the notification would have a limited positive impact on domestic manufacturers. However, it does signal the government’s intent to safeguard domestic industry while ensuring that imports are from registered/licenced owners only,” ICICI Securities said in a note.

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TVS Srichakra to invest Rs 1000 crore in capex
South India based leading tyre maker TVS Srichakra Ltd, a part of
$8.5 billion TVS Group on Tuesday announced its planned capital
expenditure of Rs.1,000 crores to ramp up manufacturing in its
Madurai and Pantnagar plants. This investment is planned to be
made over a three year period this will result in an increase in 2 &
3-wheeler tyre capacity by 25-30% and doubling of off-highway
tyre capacity from current levels. The investment is planned to be
funded by a mix of debt and internal accruals.

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Thanks for sharing @bhaskarbora67. This is a very good development.

Entire 2-3 wheeler Tyre industry was crowded with capacity additions across the industry due to lucrative profitability in 2014-2018 period. And at the same time auto cycle went into the slump.

Gradually TVS Srichakra came to ~90% utilization levels but halted this capex plan due to industry environment still not being very encouraging.

This development probably shows confidence in otherwise conservative management that things are improving and they would be potentially effectively use this capacity.

Also, this ratings report published recently is must read to understand big picture.

https://www.indiaratings.co.in/PressRelease?pressReleaseID=52985&title=india-ratings-affirms-tvs-srichakra-at-‘ind-aa-’%2Fstable%3B-rates-additional-bank-loans

Disclosure: Tracking, not invested. Only for educational purpose.

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Some new development happening here.

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