Hi Ashish,
The cry is because of huge China dumping. Chinese tyres are almost 30% cheap than the Indian counterparts. The year on year growth of Chinese tyres imports to India has been 57% in bus and truck wheels and 20% + in passenger segment (last fiscal). To tackle this when the Indian counterparts went with a price cut, the rubber prices started increasing. This led to increase in input prices and reduction in output prices. What we have witnessed for last year, the profits going up like anything due to rubber prices going down, (90% profit growth), will be reversed this year. Assuming that the conditions remain the same (Govt. does nothing to protect the industry), the margins of these companies will shrink with even lower top line growth year on year.
Imagine with this scenario, JK tyre is coming up with capacity expansion. Let the first quarter go, and you will find these stocks even more cheap. I feel one should start buying out then, looking at the broad macro industry scenario.