All of us come across different rubber products each day. These products vary from tires for our vehicles, belts, shoes, etc. We seem to ignore this fact but rubber products are all around us in our daily life.
India holds the title of the world’s third-largest consumer and fourth-biggest producer of natural rubber. Let us delve into this industry and see which rubber stocks are thriving in India.
Also read: Rubber and plastics industry in India: A goldmine for investors
Overview of Indian rubber industry
The two categories of products manufactured by the rubber industry are natural rubber and synthetic rubber. Natural rubber is stronger and more durable than synthetic rubber.
India produced 857,000 tonnes of natural rubber in 2024 experts predict it can rise to about 875,000 tonnes in 2025. Since rubber does need plenty of rainfall and moisture to grow, and Kerala has a favourable climate for it, currently 74% of India’s natural rubber is produced by the state.
Consumption of natural rubber is more than its production in India. The reason is more demand coming from the automotive and construction industry. The automobile industry stands as the largest consumer of rubber in India at 67.3%. To keep up with this demand, India imports rubber from Vietnam, Malaysia, and other Southeast Asian nations.
Also read: India’s auto component industry: A case study in innovation and excellence
The Indian government has set aside ₹708 crores to boost the rubber industry’s growth for FY25 and FY26. This money will help expand rubber plantation areas. As the automotive, healthcare, and construction sectors keep growing, experts predict a rise in rubber demand. Let’s check out the top rubber company stocks in India.
Top rubber stocks in India:
Let us look at some rubber company stocks in India as ranked by market capitalization as on November 27, 2024.
- Pix Transmission ltd: This company specializes in manufacturing industrial rubber products. Pix Transmission supplies its products in over 100 countries. This company manufactures spiral hoses, industrial hoses, wrap belts, cut belts, etc. The company owns fully automated and state-of-the-art manufacturing units.
- Tinna rubber and infrastructure ltd: This company makes synthetic rubber and synthetic latex. Its products find use in many industries. These include paper, tires, cords, carpets, construction, textiles, footwear, gloves, and automotive. The company employs 550 people. Its notable clients consist of big names such as ITC and Asian Paints.
- Apcotex industries ltd: Apcotex makes synthetic rubber and synthetic latex. Its products find use in many industries. These include paper, tires, cords, carpets, construction, textiles, footwear, gloves, and automotive. The company employs 550 people. Its notable clients consist of big names such as ITC and Asian Paints.
- Rubfila international ltd: Rubfila manufactures and exports extruded round latex rubber thread. The company owns two manufacturing plants strategically located in Tamil Nadu and Kerala, near rubber plantations. It has a total installed manufacturing capacity of 27,500 tons per annum. This company exports to over 30 countries.
- Indag rubber ltd: Indag manufactures precured tread rubber and related products. This company also produces high-quality retreading products for all sorts of vehicles, for example, passenger vehicles to light and heavy commercial vehicles. This company serves the public as well as major organizations such as DTC and MSRTC.
Financials for the aforementioned companies in FY24
| Fundamental metrics (In ₹ Cr) | Pix transmission | Tinna rubber | Apcotex ind. | Ingad rubber | Rubfila intl. |
| Market cap as of 27 Nov, 2024 | 3,285 | 2,256 | 1,889 | 522 | 456 |
| Sales | 493 | 363 | 1,125 | 251 | 470 |
| Expenses | 373 | 300 | 1,011 | 234 | 434 |
| Profit before tax | 111 | 53 | 75 | 20 | 33 |
| Net profit | 83 | 40 | 54 | 16 | 25 |
| 1 year Return as on 27 Nov, 2024 | 93.51% | 127.67% | -31.27% | 35.53% | -2.82% |
Key considerations before investing in rubber sector
These important factors must be considered before investing in the rubber company stocks in India.
- The profitability of rubber companies heavily depends on the prices of rubber. This happens due to the demand & supply factors globally, geopolitics, currency exchange rate, or other unforeseen occurrences like natural calamities, which disrupt the supply chain.
Also read: Understanding the benefits and opportunities of the forex market in India
- Rubber plantation leads to deforestation and loss of biodiversity. This gets a lot of negative attention from environmentalists. As a result of this, these companies have to adopt sustainable plantation methods, which can raise the cost of operations.
- The plantation of rubber depends heavily on steady rainfall and moderate temperature. Unfavourable weather conditions like droughts, less rainfall, etc, can disturb the rubber output.
- Rubber companies face intense competition from international players located in Vietnam, Thailand, etc, who produce cheap and good quality products. Also, competition is tough in the domestic market because the market is fragmented.
Bottomline
The rubber sector stocks can be a good addition to your portfolio in the long term growth and returns. With the demand from the construction and automobile sectors set to rise, the rubber sector will benefit. But do not forget about the volatile nature of this industry. Select your investments through thorough analysis. Remember that past returns do not ensure future profitability.
FAQs
1: Which is the largest rubber company in India ?
When ranked in terms of market value, Pix Transmission Ltd is the biggest company in India. It has a market value of ₹3,285 crore as of Nov 27, 2024. Pix exports its goods to over 100 countries. The company earned a net profit of ₹83 crore in the 2024 financial year. It makes products like hoses and belts. Pix owns a completely autonomous rubber mixing plant.
2: Which is the largest rubber company in the world ?
Continental AG of Germany is ranked as the world’s largest producer of rubber products in the world. The company has a market capitalisation of close to €12.4 billion and profits amounting to €1,156.4 million. Continental AG operates 27 rubber blending lines globally.
3: Which rubber stock is best for long term investment ?
Investors who invest their capital for the long term want a track record of profitability and good future prospects for a company. An Indian rubber company, Pix Transmission, fulfills these criteria. Thorough research must be done before taking any investment action.
4: What factors affect the rubber sector ?
The rubber sector companies are affected by a lot of factors, primarily the supply and demand of rubber. Demand for rubber comes from the automobile and construction industry and they impact the demand for rubber and supply is often influenced by factors like favorable climate, competition, etc.
5: What is the outlook for the rubber sector in India ?
With the government supporting the expansion of the rubber industry, good demand from various customers, and positive demand growth expectations by industry experts, the rubber sector looks well to give good returns in the future. However proper research must be undertaken before any investment decision.
