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Shares of JK Tyre & Industries Ltd zoomed in Thursday's trade, extending their gains for the third straight session. The stock jumped 13.03 per cent today to hit a day high of Rs 170 over its previous close of Rs 150.40. Around 7.30 lakh shares changed hands today on BSE, which was more than six times compared to the two-week average volume of 1.13 lakh shares. Turnover on the counter stood at Rs 11.70 crore, commanding a market capitalisation (m-cap) of Rs 4,139.14 crore.
At today's high price of Rs 170, the stock traded 20.38 per cent lower from its 52-week high level of Rs 213.50, hit on December 9 last year.
The sharp movement in JK Tyre's share price came after it was announced that World Bank Group member International Finance Corporation (IFC) would invest $30 million (about Rs 240 crore) to pick a 5.60 per cent stake in the tyremaker.
"IFC's investment will part-finance the expansion of manufacturing capacities and integrate advanced, resource-efficient technologies in the production of commercial and passenger car radial tyres which have better safety and longevity. IFC will hold a 5.60 per cent stake in the tyre major through an issue of compulsorily convertible debentures (CCDs) on a preferential basis," JK Tyre stated in a release.
The investment aims to bolster the company's capital structure and increase production of energy-efficient radial tyres by more than 10 per cent -- from 32 million to over 35 million tyres a year by 2025.
On IFC's investment, Raghupati Singhania, Chairman & Managing Director of JK Tyre, said, "It will be utilised for the expansion of projects, which are not only growth-oriented but are also committed to promoting sustainable development and enhancing societal value creation. Innovation and technology are at the core of each of our products, which keeps us ahead of the curve to meet the needs of our customers."
The automotive industry accounts for almost 49 per cent of India's manufacturing GDP, with tyre manufacturers contributing to 2 per cent. The demand is expected to grow further.
Wendy Werner, India Country Head at IFC said, "Our partnership with JK Tyre & Industries will drive their capacity expansion and scaled manufacturing of energy-efficient tyres through resource-efficient tech, low carbon solutions, and circularity. By signalling a long-term view of the industry, IFC aims to catalyse further investments and market competitiveness, and in so doing, contribute to India's goals to become both self-reliant in domestic manufacturing, and a global manufacturing hub. We are unlocking the potential of India's manufacturing sector to drive job creation and sustainable growth."
On the technical front, the stock was last seen trading higher than the 5-day, 20- and 200-day moving averages but lower than the 50-day and 100-day moving averages. The counter's 14-day relative strength index (RSI) came at 52.89. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 25.97.
Ganesh Dongre - Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "At the current juncture stock has formed a morning star pattern which is bullish in nature for a short term. Traders can buy this stock with a stop loss of Rs 140 for a target price of Rs 175."
JK Tyre has an average target price of Rs 150.50, Trendlyne data showed, suggesting a potential downside of 3.77 per cent. The scrip has a one-year beta of 1, indicating average volatility.
Meanwhile, Indian equity benchmarks slipped into the red in late deals today as losses in technology and state-owned lenders countered gains in consumer goods and metal stocks.
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