Rubber Companies In India: In the financial year 2021-22, India’s natural rubber production reached a nine-year high, according to the Hindu Business Line. From an agricultural point of view, natural rubber’s contribution to the agricultural sector’s overall GDP – A microscopic 0.64 percent. But for the manufacturing sector, it contributes a notable 3.63 percent (Economic & Political Weekly).
The tire industry in India thrives off the availability of natural rubber. Especially in India, where the automotive industry is one of the largest in the world. Nothing short of using metal wheels can breach the need for natural rubber for the automotive industry. This sector blog post is going to cover the rubber industry, its importance in India, and the top listed rubber companies in India.
Rubber Industry In India
India is the fourth producer of natural rubber in the world. It is also the fourth-largest consumer of rubber goods in the world. The production of rubber is divided into traditional and non-traditional zones. You might observe that natural rubber is usually grown in humid climates which receive heavy rainfall. Some of the major rubber-producing states are :
- Kerala
- Tripura
- Karnataka
- Assam
- Tamil Nadu
- Meghalaya
- Nagaland
- Manipur
- Goa
- Andaman & Nicobar Islands
Kerala alone produces about 74 percent of India’s total rubber. In FY 2019-20, they produced about 5.4 lakh tonnes of natural rubber. After Kerala, Tripura is the next big producer of natural rubber in India. Besides Kerala, Karnataka and Tamil Nadu are the major rubber producers in South India.
To further push the growth of the rubber industry in India, the government has allowed for FDI (foreign direct investment) in rubber companies in India. The uses of natural rubber are vast, and half of all rubber produced is used for the automotive tire sector alone.
The rest is used for bicycle tires, tubes, footwear, belts, latex products, and more. Apart from meeting the domestic needs for natural rubber, India also exports its rubber to over 190 countries worldwide. That’s every continent on the blue planet, save for Antarctica where they need chain tracks over tires.
Listed Rubber Companies In India
| S. No. | Company | Market Cap | Current Price | 1 Year Return | 5 Year Return |
| 1 | Tube Investment of India | 49474.72 | 2561.85 | 58.87 | 965.5 |
| 2 | Balkrishna Industries | 37577 | 1943.8 | -8.74 | 59.17 |
| 3 | MRF | 35785.96 | 84400.85 | 25.73 | 9.42 |
| 4 | Apollo Tyres | 20501.06 | 322.8 | 63.44 | 9.74 |
| 5 | CEAT | 5854.75 | 1447.4 | 46.85 | -12 |
| 6 | JK Tyre & Industries | 3798.11 | 154.25 | 28.7 | -5.44 |
| 7 | Apcotex Industries | 2588.62 | 499.3 | 32.13 | 141.60 |
| 8 | GRP | 364.35 | 2739.45 | 96.9 | 113.5 |
| 9 | Elgi Rubber Company | 153.81 | 30.7 | -21.08 | -26.9 |
| 10 | Somi Conveyor Beltings | 44.17 | 37.5 | -12.04 | -28.7 |
1. Tube Investments Of India
Tube Investments of India is a Murugappa Group company. The group is one of the oldest business houses in India, having a history of over 120 years. TII is one of its biggest companies and manufactures metal products for automobiles, construction, railways, and mining. It is also one of the biggest bicycle manufacturers, owning notable brands like Hercules and BSA.
Fundamentals Of TII –
| CMP | ₹ 2,562 | Market Cap (Cr.) | ₹ 49,475 Cr. |
| EPS | ₹ 42.6 | Stock P/E | 61.2 |
| ROCE | 29.4 % | ROE | 28.1 % |
| Face Value | ₹ 1.00 | Book Value | ₹ 178 |
| Promoter Holding | 46.4 % | Price to Book Value | 14.4 |
| Debt to Equity | 0.26 | Dividend Yield | 0.14 % |
| Net Profit Margin | 7.78 % | Operating Profit Margin | 11.9 % |
TII is a large-cap stock, having a market cap of ₹49,475 crores. In FY 2022, the company saw sales of approximately ₹12,525 crores, its highest ever since listing. The same applies to its net profits of ₹991 crores, the highest in the company’s history. In the past 5 years, it had a very good profit growth of 37.2 percent.
The company’s operating profit margin has grown over the years, from 7 percent in March 2018 to 12 percent in March 2022. The company has phenomenal ROE of 29.4 percent and 28.1 percent. It has a low D/E ratio of 0.26, indicating that they have reduced debt over the years.
Coming to the ownership of the company, promoters own about 46.4 percent stake in TII, down from 47.8 percent in March 2020. A small percentage of promoter holdings (0.11%) is pledged. TII is one of the best-performing stocks on the list, giving a return of 982.3 percent in 5 years, multiplying investors’ wealth by a multiple of 10.
2. Balkrishna Industries
At number 2 on our list is Balkrishna Industries, a tire manufacturer for the Indian and global markets. Even within tires, you have the consumer section where the tires are made for cars and two-wheelers, and a commercial section for industrial vehicles such as trucks, tractors, earthmovers, etc. Balkrishna tends to the latter part of the industry.
Fundamentals Of Balkrishna Industries –
| CMP | ₹ 1,944 | Market Cap (Cr.) | ₹ 37,577 Cr. |
| EPS | ₹ 60.6 | Stock P/E | 32 |
| ROCE | 23.8 % | ROE | 21.9 % |
| Face Value | ₹ 2.00 | Book Value | ₹ 393 |
| Promoter Holding | 58.3 % | Price to Book Value | 4.95 |
| Debt to Equity | 0.42 | Dividend Yield | 0.82 % |
| Net Profit Margin | 17.0 % | Operating Profit Margin | 16.7 % |
Balkrishna Tires is a mid-cap tire manufacturer, having a market capitalization of ₹37,577 crores. The company’s business is mainly focused on the commercial and industrial tire sector of the rubber industry. For the year 2021-22, the company reported revenues of ₹8,295 crores, their highest recorded revenues.
Net profits also followed suit, clocking in ₹1,435 crores that year. They have maintained a healthy operating profit margin of 24-31 percent in the past 5 years and a good dividend payout of 35.3 percent. Its ROE of 21.9 percent and ROCE of 23.8 percent make it one of the best-performing companies in its sector. The stock P/E of Balkrishna Industries is 32, which is not far from its industry P/E of 30.7.
The company has a manageable D/E ratio of 0.42. Promoters of the company, the Poddar Family, own 58.30 percent of the company, with no pledging or recent sale of stake as of December 2022. Finally, coming to the returns – Balkrishna Industries has given a return of 59.65 percent.
3. MRF
Madras Rubber Factory or MRF is a name well-known by cricket fans and investors. The former knows the name because of the attachment of the Indian skipper Virat Kohli when it comes to their cricket bats. The latter know it infamously, for being the most expensive stock in India’s markets. What the company does, is make and sell tires for automobiles.
Fundamentals Of MRF –
| CMP | ₹ 84,401 | Market Cap (Cr.) | ₹ 35,786 Cr. |
| EPS | ₹ 1,399 | Stock P/E | 60.3 |
| ROCE | 7.05 % | ROE | 4.85 % |
| Face Value | ₹ 10.0 | Book Value | ₹ 33,566 |
| Promoter Holding | 27.9 % | Price to Book Value | 2.51 |
| Debt to Equity | 0.22 | Dividend Yield | 0.18 % |
| Net Profit Margin | 3.44 % | Operating Profit Margin | 9.24 % |
MRF is one of the leading tire manufacturers. It makes tires for two-wheelers, three-wheelers, passengers, and commercial vehicles. It is a mid-cap company with a market capitalization of ₹35,786 crores. For the financial year 2022, they disclosed revenues of ₹19,317 crores, one of its highest historical sales.
The same could not be said for its profits. Operating profit margins have dropped significantly over the years. FY 2022 OPM was just 11 percent, versus 18 percent in FY 2021. This trickled down to net profits, which are almost half (₹669 crores) of FY 2021 (₹1,277 crores).
The company has a low ROE and ROCE of 4.8 and 7.05 percent respectively. Its stock P/E of 60, is double that of its industry P/E of 30.7, indicating that the stock is heavily overpriced. This should come as no surprise since MRF shares are the most expensive shares in the entire Indian market.
One share of MRF will set you back ₹84,401, as of April 4, 2023. MRF has a manageable and low D/E ratio of 0.22, meaning that the company has managed its debt well. Promoters of MRF hold a 27.9 percent stake in the company and they haven’t trimmed a sizable stake anytime recently.
Finally, the returns of MRF shares. In 5 years, the company has given an 8.85 percent return, which is quite low compared to its peers.
4. Apollo Tyres
In the tire industry, we have the next rubber company in India – Apollo Tyres. The company has an international market for tires, serving over 100 countries. It has seven plants in India and Europe, along with two R&D centers. It is one of the biggest tire makers in India. Apollo Tyres makes tires for all types of vehicles from two-wheelers to 18-wheeler trucks.
Fundamentals Of Apollo Tyres –
| CMP | ₹ 321 | Market Cap (Cr.) | ₹ 20,409 Cr. |
| EPS | ₹ 12.4 | Stock P/E | 25.9 |
| ROCE | 6.98 % | ROE | 5.49 % |
| Face Value | ₹ 1.00 | Book Value | ₹ 178 |
| Promoter Holding | 37.3 % | Price to Book Value | 1.82 |
| Debt to Equity | 0.63 | Dividend Yield | 1.01 % |
| Net Profit Margin | 3.04 % | Operating Profit Margin | 12.3 % |
At #4, Apollo Tyres is a mid-cap tire manufacturer having a market cap of ₹20,409 crores. Their market capitalization, is not far from their sales in FY 2022, at ₹20,948 crores. This milestone marks the first time Apollo Tyres breached the ₹20,000 crore ceiling for sales.
While the company is profitable, the operating profit margins have dropped over the years. Apollo Tyres was able to make a net profit of ₹724 crores in FY 2018, from sales of ₹14,843 crores. But in FY 2022, their net profits were ₹639 crores, despite having a revenue difference of almost six thousand crores.
The cost of raw materials needed for tire production has gone up over the years, and this is carving its way into the company’s profits.
5. CEAT
Coming to the last company on our list of rubber companies in India – CEAT.Like its competitors, CEAT manufactures tires for different types of vehicles. Founded in 1958, it is one of the major tire makers in the country. They make tires for scooters, bikes, three-wheelers, cars, buses, and trucks. CEAT has a presence in over 110 countries, along with 27+ OEM partners.
Fundamentals Of CEAT –
| CMP | ₹ 1,447 | Market Cap (Cr.) | ₹ 5,855 Cr. |
| EPS | ₹ 19.2 | Stock P/E | 67.3 |
| ROCE | 6.35 % | ROE | 2.59 % |
| Face Value | ₹ 10.0 | Book Value | ₹ 809 |
| Promoter Holding | 47.2 % | Price to Book Value | 1.79 |
| Debt to Equity | 0.73 | Dividend Yield | 0.21 % |
| Net Profit Margin | 0.91 % | Operating Profit Margin | 7.14 % |
With a market cap of ₹5,855 crores, CEAT is a small-cap tire manufacturer. But don’t let its market cap fool you. The company has a rich history, a global presence, and a fierce market presence. Its sales for FY 2022 were ₹9,363 crores, and its FY 2023 sales are close to breaching the five-figure milestone.
Like every other tire maker, operating profit margins for FY 2022 fell substantially as the cost of materials rose across the industry. The impact can be seen in the net profits of the company, which were at a 10-year low of just ₹71 crores.
The effect can also be seen in the company’s ROE (2.59 percent) and ROCE (6.35 percent), which are one of the lowest in the industry. The stock P/E of 65.7 vs the industry P/E of 30.7 showed a severe overvaluation of its share price.
One good factor is the D/E ratio of the company, which is 0.73, and below one. Promoters own 47.2 percent of the company., and have increased their stake marginally in the past few years. The 5-year returns of CEAT are in red, giving a negative ROI of -14.19 percent.
Also Read: List of Gaming Companies Listed In Indian Stock Market!
In Closing
The rubber industry, although important and vital to the global economy, has seen a recent hit due to the rise in crude oil prices. The reason is that petroleum products are imperative to the creation of tires. You can observe a trend where higher revenues of each of the companies haven’t made up for the oil price rise.
That doesn’t change the fact that this industry is set to boom in the future, as the need for natural rubber and its byproducts is unlikely to go away anytime soon. That’s all for this article on rubber companies in India. We hope you learned something new and go one step further in your investing journey.
Tags: Who is the biggest manufacturer of rubber?, Which is the biggest rubber market in India?, Which is the best quality rubber in India?, Who is the top rubber supplier?, Top 10 rubber companies in India, Listed rubber companies in India, Rubber company name List, Natural rubber manufacturers in India, Rubber industry in India, Rubber Company stocks in India, Top rubber companies in India, Rubber Companies In India