NEW DELHI: Global financial services firm Deutsche Bank initiated coverage of MRF and Ceat with ‘Buy’ rating and set a target price of Rs 80,000 and Rs 2,150, respectively, citing revival in volume growth and margins.

MRF was trading 0.41 per cent down at Rs 63,026.60 in the afternoon trade, while Ceat was down 0.25 per cent at Rs 1,737.60 around 2.40 pm (IST). Benchmark BSE Sensex was down 439 points, or 1.36 per cent, at 31,930.

Deutsche Bank believes demand for truck tyres should recover to 8 per cent per annum in FY17-20 as compared with 1 per cent per annul during FY14-17

Brokerage sees EBITDA margins in sector improving by 600-1,100 basis points from current depressed levels, driven by lower raw material prices, favourable anti-dumping duty on Chinese tyres.

The re-imposed anti-dumping duty on Chinese tyres is positive for the industry as it will provide a level-playing field for domestic manufacturers.

Domestic rating agency ICRA expects this will lead to a strong demand pickup for large truck tyre manufacturers. The government on September 18 slapped anti-dumping duty ranging between $245.35 and $452.33 per tonne on Chinese tyres for five years.