Falling Rubber Prices a Positive Trigger for GTYR and PTL

The recent decline in international rubber prices is expected to boost margins for Pakistan’s listed tyre manufacturers, particularly General Tyre (GTYR) and Panther Tyres (PTL).

Rubber prices down 22% from peak

Global rubber prices have dropped sharply by 22%, falling from US$2.21/kg in Sep-2024 to US$1.66/kg in Jul-2025. The average decline in 4QFY25 alone was 17% QoQ.

This is a key development for GTYR and PTL, as crude rubber accounts for 25–30% of their total production cost.

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Margin expansion expected

While the recent drop could cause short-term inventory losses (due to older, higher-cost inventory), sustained lower input prices are expected to improve gross margins by 2.5–3%, assuming only half the cost benefit is passed on to consumers.

This margin expansion may support near-term earnings, especially as auto sales volumes are rising on the back of lower car financing rates.

Sector trading below historical valuation

The tyre sector is trading at P/BV of 0.9x, below its 5-year average of 1.1x, and far below its peak 2.0x valuation from five years ago.

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• PTL, which was listed in FY21, entered the market at a P/BV of 2.4x.
• GTYR continues to trade below long-term average despite its exposure to improving industry fundamentals.

Outlook

Given current rubber price trends and sector valuations, GTYR and PTL appear positioned to benefit from improved cost dynamics in FY25. Sustained softness in rubber prices, if maintained, could offer upside risk to consensus margin and earnings forecasts.

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →