Kerala & Karnataka Floods Hit Tyre and Coffee Industry Stocks

Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    Heavy rains in Kerala and parts of Karnataka has started showing an adverse effect on tyre and coffee industry stocks. With rubber output already seen taking a hit since 1 August, the coffee production is set to slump to its 21-year low. According to the United Planters' Association of Southern India, from 1 October, the coffee output will be 25 percent lower than the estimated 316,000 metric tons and this would be the lowest since 1997-98 (as per government data).

    Kerala & Karnataka Floods Hit Tyre and Coffee Industry Stocks
     

    India is the seventh largest producer of coffee in the world as of 2015-16 and exports 70 percent of this production. While this will hurt Indian producers, the global market sellers will benefit price-wise from the fall in supply. Flood-hit Kodagu district accounts for the 40 percent of India's production, and along with the neighbouring districts of Chickmaglur and Hassan, Karnataka makes up for 70 percent. Kerala follows Karnataka, making for 20 percent of the country's output.

    Share prices of Coffee Day Enterprises and Tata Coffee have been trading lower than they were at the beginning of the month.

    On the other hand, flood-hit Kerala accounts for 85 percent of India's rubber production, the key input in the tyre industries. Companies dependant on the state's production like MRF, JK Tyres, Apollo Tyres and Ceat are likely to see a drop in margins.

    Apollo tyres share price has already been seen falling as much as 11 percent this month. The Gurugram-based company has plants located in Perambra and Kalamassery, Kerala, which have been damaged due to floods. MRF stocks slumped by 6 percent in August.

    India is the sixth largest producer of rubber and the second last consumer of the same. Industry experts said that as the damage from floods would take a few years to recover, Indian tyre makers are likely to depend on imports for production.

    Read more about: kerala karnataka tyre apollo tyres mrf
    Story first published: Monday, August 27, 2018, 11:36 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    Get Latest News alerts from Goodreturns

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more