Synopsis:
The Indian tyre industry is projected to grow 7-8% in FY26, driven largely by replacement demand, which accounts for half of annual sales. While OEM demand remains subdued, factors like festive season boosts, repo rate cuts, and rural sentiment are expected to support growth.
Major players like MRF, CEAT, Apollo Tyres, JK Tyres, and Balkrishna Industries are set to benefit from rising demand, capacity expansion, and increasing exports. In this article, we will dive more into the details.
Analyst Comments
The domestic tyre industry is projected to see a revenue growth of 7-8 percent in FY26, mainly fueled by replacement demand, according to reports. Anshuman Singhania, the Managing Director of JK Tyre & Industries, pointed out that this industry is heavily reliant on exports, with outbound shipments surpassing Rs 25,000 crore in FY25.
Even though demand from Original Equipment Manufacturers (OEMs) has been somewhat low, the sector is poised for growth thanks to ongoing investments in expanding capacity, enhancing manufacturing efficiency, and a stronger emphasis on research and development.
Singhania also mentioned that the upcoming festive season, along with repo rate cuts and favourable monsoon conditions, is likely to uplift consumer sentiment and further drive demand.
Similarly, Gaurav Kumar, CFO of Apollo Tyres, indicated that demand is expected to pick up in the latter half of the fiscal year, bolstered by a recovery in the infrastructure and mining sectors post-monsoon. On the raw material side, he anticipates a slight easing of costs in Q2, although fluctuations in exchange rates could introduce some unpredictability.
Srikumar Krishnamurthy from ICRA noted that tyre demand from OEMs in both commercial and passenger vehicle segments may lag behind the growth in two-wheeler demand.
However, replacement demand, which constitutes the largest portion of the tyre market, is expected to remain robust, supported by positive rural sentiment, festive demand, and increased consumption following rate cuts, even as urban demand remains subdued. On the export front, the industry might encounter challenges due to geopolitical tensions and uncertainties surrounding US tariffs.
A report from Crisil Ratings suggests that the replacement market, which makes up half of annual sales, will continue to be a key driver of overall growth, while OEM offtake stays weak. Additionally, the trend towards premium tyres is likely to slightly enhance revenue, providing further support to the industry’s financial performance.
Also Read: Block Deal: Stock falls over 3% after promoter likely to sell 7% stake worth ₹599 Cr in the Co.
Stocks to benefit
All major tyre manufacturers are expected to drive significant growth in this domain, followed by a strong strong expansion plans and their strong fundamentals, out of which we will look at some of the players.
MRF, the giant, is in the prime spot of stealing the show. It has a robust presence across all main segments, namely passenger vehicles, commercial vehicles and 2-wheelers. It has a strong dealer base of more than 5000 and a market share of 30 percent in the domestic tyre market.
CEAT, Apollo Tyres, and JK Tyre & Industries are some of the top contenders in the Indian tyre market, making their mark particularly in the two-wheeler and passenger vehicle sectors.
CEAT derives 53 percent, JK Tyres derives 61 percent, and Apollo Tyres derives a staggering 75 percent of its revenue from its Replacement channel, which also makes them a strong contender in this space.
On a different note, Balkrishna Industries (BKT) has carved out a unique niche for itself by focusing on off-highway tyres (OHT) for industries such as agriculture, construction, mining, and earthmoving.
Unlike its competitors, BKT generates a large chunk of its revenue from exports, positioning itself as a significant player in the global OHT market. It derives 73.3 percent of its revenue from its Replacement channel.
With the industry expected to rise in the near future, these companies are expected to be the prime beneficiaries of this ever-growing industry. Additionally, with increasing vehicle sales, continuous expansion and R&D by these players, places these as the top contenders.
Written by Satyajeet Mukherjee
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
