Government increases import duty on natural rubber - Angel Broking

According to media reports, the Central Government has increased the import duty on natural rubber with effect from December 20, 2013. As per the revised rates, the basic customs duty will now be charged at Rs. 30/ kg or 20%, whichever is lower as against Rs. 20/ kg or 20% whichever is lower, earlier. While the increase in the specific rate of import duty will pressurize the margins of domestic tyre manufacturers like, MRF, Apollo Tyres, JK Tyre & Industries and Ceat; we believe that the impact will be minimum given that the companies imports natural rubber through the advance license route against exports, allowing them to import at zero duty. Exports currently form 10-20% of the total sales for the domestic companies. We would seek more clarity from the management on this front; until then we broadly maintain our estimates for our coverage stocks. We maintain our Neutral rating on Apollo Tyres, JK Tyre & Industries and Ceat.

Source : Equity Bulls

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