An in-depth study of Indian Tyre Industry

Based on Fundamental and Technical Analysis

Objective of the project:

 To analyze the tyre industry with respect to its demand, production, problems with availability of raw
materials, its growing contribution towards the GDP, and forecasting the future growth of the industry
so as to make investment decisions for better returns.
 To analyze the companies in the industry based on its fundamentals to forecast the long term price
movements of the stock.
 To analyze the companies in the industry based on technical analysis of the price of the stock and
forecast the entry and exit point for the stock according to the chart of the company stock for short
term trading.
About internship at IIFL Securities:
IIFL is a leading financial services group founded by Nirmal Jain in 1995 operating
in diverse services like Wealth & Asset Management, Housing Finance, Securities
Broking, Research Products, Investment Banking, Property Advisory Services,
Financial Products distribution, etc.
The tasks for internship at IIFL included Financial Markets awareness programme,
under which interns were supposed to open de-mat accounts of their clients. The
target specified was 4 for every intern.
Every intern also acted as a portfolio manager for their clients.
Being part of Fundamental team, I also acted as an Equity Research Analyst.
Research being conducted on various sectors by the team, such as,
Pharmaceutical sector, Cement Sector & IT Sector.
About Indian Tyre Industry:
 The tyre industry provides the wheels on which an economy rides.
 It constitutes end of the chain for the natural rubber industry and is vital for the
automotive industry.
 Indian tyres are truly a competitive global product with a turnover of over
₹60,000 crores and exports of ₹ 13,180 crores in 2017-18, reaching the $2Bn
mark for the first time.
 Capital investment has grown by over 25% to ₹36,000 crore in 2017-18 from
₹12,000 crore in 2010-11, making it one of the most invested industries by in
India.
 The industry contributes 3% of India’s manufacturing GDP and 0.5% of the total
GDP.
 Its output multiplier effect is estimated at 2.47 due to the linkages with other
sectors of the economy such as rubber plantations, petroleum, chemical, capital
goods and packaging materials, etc.
Manufacturing process of Tyre:
SWOT Analysis of the industry:
Strengths: Weakness:
1. Exports 1. Capital intensive
2. Innovation & R&D industry
3. Contribution to the 2. Cost Pressures
GDP 3. Pricing Pressures
4. High Output 4. Dependence on
Multiplier OEMs

Opportunities: Threats:
1. Growing Economy 1. Import of raw
2. Low passenger cars materials
penetration levels 2. Tyre imports from
3. The Auto industry is China
at the end of its 3. Inverted Duty
slowdown phase Structure
Porter’s 5 Forces analysis:
Threat of new entrants: Buyer Bargaining Power:
Low High

Market Rivalry:
High

Supplier Bargaining Threat of Substitution:

Power: High Low
Recommendations for investment:
Top Picks for long term
investment:

1. Apollo Tyres
2. CEAT Tyres
3. JK Tyres