It's Time To Book Profit - Indag Rubber

We had recommended Indag Rubber to our investor as one of our Low Priced Scrip in issue No 7 (dated March 15-28, 2010) at Rs 91. Our recommendation was backed by the factors like strong financial performance for 9MFY10 wherein is topline and bottomline was better than FY09 as a whole. Further the company’s dividend was another factor and third was the expansion plans. But what made us recommend the counter to our investors was increasing cost of new tyres which ultimately results in rise in demand for re-treaded tyres. Looking at all these factors we had recommended the counter with a target price of Rs 110.  Now at current levels the scrip is trading at Rs 113 and hence we are of the opinion that, prudent strategy will be to book profit at current levels.

When we had recommended the counter we had mentioned about its expansion plans. Here the company is planning to increase its pre-cured tread rubber capacity to 18000 MTPA from the current levels of 8950 MTPA. Further the company’s management is quite buyout about the export market also.  We are also of the opinion that the increase in volume of automobile sales figure also augurs well for the company. It is true that the company is expected to perform better in the Q4FY10 which may provide some more upside to the counter. But looking at the current scenario in the market we fell booking profit seems to be the right strategy.