Why is Nomura upbeat about Indian tyre industry? Apollo Tyres, Ceat & Balkrishna on its radar

    Global research firm believes that the Indian tyre industry is witnessing a phase of cyclical uptick in demand.

    The industry fundamentals are in a better shape now due to the demand and high utilization as well, analysts at the firm wrote in their report.

    It sees 8 percent volume CAGR over FY18-21.

    The segment is a good play on the back of healthy growth outlook, pricing discipline, and benign commodity prices, which will support margins.

    Further, the benign commodity prices could also lead to 20-25% EBITDA CAGR over FY18-21.

    Nomura expects strong demand scenario to keep utilization healthy.

    Among stocks, it has initiated coverage on Apollo Tyres with a target at Rs 288, along with Ceat and Balkrishna Industries.

    On Ceat, it neutral with a target at Rs 1,346. In case of Balkrishna Industries, it is also neutral with a target at Rs 1,008.

    [“source=cnbc”]