Amid cooling raw material prices, the crude-oil linked companies crude oil-linked companies, which includes paint and tyre firms, have been on a roll over the past one year. Shares of related companies have gained up to 84 per cent, as against a 14 per cent rise in the S&P BSE Sensex. Analysts, however, believe stretched valuations in both these sectors could trigger a de-rating.
"Despite strong January-March quarter (Q4FY23) performance by paint and tyre companies, we believe that the positives are already priced-in, and foresee a near-term correction due to premium valuations. While the average valuation of paint companies stands around 55 times (x) trailing twelve months, tyre-makers trade at an average of 33x trailing twelve-month period," said AK Prabhakar, head of research, IDBI Capital. By comparison, average valuation, historically, has been below 36x for paints, and below 12x for tyres.
Moreover, the possibility of a pricing
TO READ THE FULL STORY, SUBSCRIBE NOW NOW AT JUST RS 249 A MONTH.
Subscribe To Insights
Key stories on business-standard.com are available to premium subscribers only.Already a BS Premium subscriber? Log in NOW
What you get on Business Standard Premium?
- Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
- Pick your 5 favourite companies, get a daily email with all news updates on them.
- Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
- Preferential invites to Business Standard events.
- Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.