Shares of JK Tyre jumped 4%. Know why

Shares of JK Tyre & Industries, a mid-sized tyre maker, jumped more than 4 percent after the company reported a sharp jump in quarterly profit on the back of a fall in raw material prices.

JK Tyre said its first quarter Net Profit rose 113 percent to 118.1 crore rupees compared with 55.4 crore rupees in the same quarter a year ago. Sales during April-June fell 4.7 percent to 1,777 crore rupees from 1,864 crore rupees in the year ago period as Chinese rivals dumped tyres into India after the US imposed heavy anti-dumping duties to protect its own markets.

Tyre makers have seen prices of input costs such as natural rubber go down sharply as a global downturn in commodities resulted in lower raw material costs.

Meanwhile, JK Tyre rose 4.3 percent, or 5.30 rupees, to 122.70 rupees, a record high on the National Stock Exchange, where 48 lakh shares were traded by 11 am compared with the 5-day average of 64 lakh shares.

JK Tyre's market capitalisation has jumped 95 percent in the past one year to 2,819 crore rupees as investors bought into India's auto boom and tyre companies enjoyed lower raw material costs.

Image credit: Indiatimes