How often do you come across industries that are extremely vital for the economy but are often underrated from an investment perspective? One such industry is the Rubber Manufacturing Industry. Finished products of this industry are seen across various other industries like automobiles, tyres, clothes, furniture, footwear, hose and every other machinery. In this article, we take a closer look at the rubber manufacturing industry and also the best stocks in rubber manufacturing industry. Keep Reading to find out!
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Indian Rubber Manufacturing Industry – Overview
Despite having an important role to play not only in the domestic but also in the global economy the Indian rubber industry is not spoken of enough. This is on both fronts production and consumption. India is one of the world’s largest producers of rubber and the third-largest consumer of natural rubber.
Indian rubber is exported to over 190 countries. The country currently has the capacity to consume the entire indigenous production of natural rubber giving producers a host of opportunities domestically itself.
The Indian rubber industry grows in proportion to the Indian economy. The industry also grows depending on the industries where rubber is used as the raw material. The top consumers of the rubber industry-wise are the Automotive tyre sector, bicycle tyres and tubes, footwear, belts and hoses, camelback and latex products among various others.
Out of these, the biggest consumer of rubber products is the tyre industry. The Indian automotive tyre sector accounts for over 50% consumption of rubber of all kinds. In addition to this the robust potential that the sector has also offered the widespread potential for the production of rubber.
India is currently among the top 5 commercial vehicle producers in the world, producing almost 3.5 million vehicles in 2020 a drop from 4.5 million vehicles a year earlier. In addition to this India is also the 2nd largest market for 2 wheelers in the world.
The Indian rubber industry is severely concentrated in a few states only. Currently, Kerala makes up 90% of the total rubber production in India. The government also has given a push to this industry by allowing up to 100% FDI. In addition, the focus that the government has on improving infrastructure like roads will further result in a massive thrust to this industry.
Best Stocks in Rubber Manufacturing Industry
Now that we have gone through the potential that the Indian rubber industry holds let us have a look at the top rubber companies in the industry. These include:
Founded in 1980, Apcotex Industries is one of the leading suppliers of rubber-based raw materials used in the production of various industries. The company is one of the leading producers of Performance Emulsion Polymers in the country. Their products include VP latex, Carboxylated and Non-Carboxylated SB latexes, Acrylic latexes, Nitrile latex and Synthetic Rubber.
Their latexes have had an application for Tyre Cord Dipping, Paper/Board Coating, Carpet Backing, Construction (Concrete Modification, Water Proofing, etc.), Paints, Textile Finishing and Automotive Components. In addition to this their Apcotex’s High Styrene Synthetic Rubber finds its application in footwear, automotive components, v-belts, conveyor belts and hoses.
If we take a look at the financials Apcotex is one of the largest listed companies working specifically with rubber production. The company has a market cap of Rs. 2000 crores. The company has increased revenues and profits for 3 years from 2017 to 2019.
These dropped in 2020 but have once again picked up. The revenues stood at Rs. 540 crores and Rs. 44 crores for FY 2020-21. The company also has a low debt-equity ratio of 0.04 and it also has a good promoter holding of 58.2%.
Pix transmission is one of the leading producers of industry-grade belts. The company operates in Maharashtra where it has 4 manufacturing facilities. These facilities include an automated rubber mixing facility and state of the art belt manufacturing units.
The company’s product portfolio includes Industrial belts, agricultural belts, lawn & garden belts, Automotive belts, hi-power rated belts among various other products.
These products find their uses in automotive, agriculture, ceramic, cold storage, food processing, domestic appliance, cement, machine tools, oil and gas, packaging, paper, pharmaceutical, steel, textile among various other industries.
Apart from belts, the company is also engaged in the production of hoses. These include hydraulic and industrial hose, hose assemblies and fittings. These find their uses in general engineering, marine, agriculture, mining, construction etc.
Now let us take a look at the company’s financials. The revenue and profits of the company show positive prospects as the company’s revenues and profits have been continuously been increasing since 2017. Its profits have risen from Rs. 16 crores in 2017 to Rs. 64 crores in FY year ending 2021.
It is also important to note that exports also make a significant chunk of their sales. Domestic sales account for 52% of their total sales whereas exports make up 48%. Another green flag has been the promoters’ holdings which stands at 61.76% which also has increased since 2020. The company also has a low debt-equity ratio of 0.24.
Founded in 1978, Indag Rubber is another one of the top listed companies in this industry. The company is a leading manufacturer of tyre retreading materials. The company has played an important role when it comes to India’s retreading industry.
They introduced the cold retreading technology which was nothing short of revolutionary in the country. The company also has a widespread presence through its 1200+ retreaders spread across the country.
A closer look at the financials reveals more about the company. The company’s profits have continuously been on a decline since 2017. A not so bright sign. On the positive side, the promoters hold a large stake in the company of 73.34%. In addition to this, the company also has no debt.
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Founded in 1994, Rubfila International is another top company with a unique niche in this industry. The company is the only Indian manufacturer of both Talcum coated and silicon-coated rubber threads. The company’s products are used in hosiery products, toys, fishing, meat packing, medical webbing and even bungee jumping cords!
Financially the company produced its best Revenues and profits since 2018. The company posted revenues and profits of Rs. 322 crores and Rs. 33 crores. In addition to this, the promoters hold a 62.39% stake which has increased over the last year. The company is also debt-free.
Rubber Industry Stocks in India List (4th Jan 2022) Company NameCMPMCap (Rs. in cr) Apcotex Ind₹3902,013.14 Pix Transmissions Ltd₹9391,303 Indag Rubber₹83.5216.17 Rubfila International Ltd₹109.10592.06 GRP₹1506.5168.01 Cosco India₹160.1066.06 Mahalaxmi Rubtech Ltd.₹68.1072.00 Rishiroop₹119.65108.59 MM Rubber₹55.0036.05 Eastern Treads₹49.3525.87 Vamshi Rubber₹26.1510.94
As we have seen above the Indian Rubber Manufacturing Industry has a lot of potentials. The industry currently still hasn’t met the domestic consumption requirements of the country. This gives local producers a lot of scopes both domestically and internationally too.
The industry has a CAGR of 10% and is expected to be worth over Rs. 80,000 crores. Hence investors can take a closer look at the best stocks in rubber manufacturing industry and the growth prospects of the industry. That’s all for this post!. Let us know what you think in the comments below. Happy Investing!