MRF poised to perform well: Dipan Mehta

In a chat with ET Now, Dipan Mehta, Member, BSE and NSE, shares his views on the tyre sector.

ET Now: MRF numbers bring me to that tyre space because funds are actively buying into the tyre companies. We saw evidence of that yesterday with JK Tyre. The stocks are trading at fresh 52-week highs and they are continuing unabated. The Ceat QIP II on right now. what do you make of this space and particularly MRF as well with another quarter of very robust numbers?

Dipan Mehta: In the last two-three years, the tyre companies have done exceedingly well. Certain amount of pricing discipline has come through and capacities have not come in place. At the same time, demand has increased pretty well and some of the export markets also have opened up for lot of these tyre companies and, of course, the final benefit was account of lower raw material cost especially rubber and all those benefits are flowing to the top line and the bottom line for most tyre companies. If you see in terms of performance, MRF had a bit of a laggard but after this result, one could clearly conclude that definitely the company has caught up with his peer group and maybe from this point on, it may even do better than its peer group considering its dominant position within the industry.

ET Now: Right but which is your top bet when it comes to the tyre space. MRF is an expensive stock but nevertheless it has had a strong run?

Dipan Mehta: Well some of the smaller tyre companies like TVS Srichakra and to an extent even Balkrishna Industries look quite interesting but Balkrishna came out with disappointing set of numbers. So we just like to hold our recommendation over there but TVS Srichakra continues to do exceedingly well and it is kind of a niche player. So that would be the preference but after these numbers of MRF, one would need to look at MRF more closely and understand exactly what went right for the company and that could also turn out to be a good investment opportunity.