Hotchips - IRB INFRASTRUCTURE & APOLLO TYRES

IRB INFRASTRUCTURE         BSE Code: 532947    Volume:218608     CMP:  265.40

The recent hike in the net worth criteria by NHAI for large projects may bring in some advantage to the larger road construc-tion players. According to the revised norms, the net worth criteria has three slabs. This move is likely to reduce the competition for larger projects and the bidding war will be limited to the few large-sized players. It is said that the move is meant for better and timely execution of projects. This may lay the road for the Ministry of Roadways’ plan for 20 kilometres of road con-struction per day. The present order book for the company stands at Rs 92 billion as on 31st December 2009. This move by NHAI is likely to ensure the timely execution of the projects going forward as the company has a stable background of completion of projects in time and attaining financial closures for all its projects. Investors’ can look for gain with this stock for a short to medium-term perspective.

APOLLO TYRES          BSE Code: 500877         Volume: 1945951        CMP: 73.05

The current demand environment in the automobile industry has led to a supply-demand mismatch and hence strained the production of tyre manufacturers to meet the strong demand in the sector, almost all the tyre companies are operating at full capacity utilisation. Apollo Tyres, with the commencement of its 100 tonne per day additional capacity at its new Chennai plant this month (overall capacity increase by 11 per cent for FY2011) is likely to be a key beneficiary for the stock going forward. The price of natural rubber which forms for a major portion of the expenditure incurred has seen an upward movement in the recent past, appreciating by almost 44 percent to Rs 150 per kg. The company may increase the prices again in the near future. Apollo Tyres can perceive an progressive transition from its present levels in the near term as the demand scenario will continue to remain robust for the industry. Therefore, investors can look at this stock for both, short and medium-term perspective.