Ratings agency ICRA in its latest report has said that after two years of contraction, the Indian tyre industry's demand is poised to grow by 13-15 percent in the original equipment manufacturer (OEM) segment and 7-9 percent in the replacement market segment this fiscal (FY22). Stating that capex executions have resumed in the last few months after a hiatus with improving domestic and exports demand, it said based on projected demand growth, capital expenditure of over Rs 20,000 crore is expected in the tyre industry between FY2022 and FY2025, which would be partly debt funded.
According to the report, the demand outlook of the tyre industry remains favourable and growth in the ongoing fiscal will be aided by a sharp recovery in OEM tyre demand, lower base effect of FY2021, improving pace of vaccination, continued preference for personal mobility and healthy rural cash flows amid a normal monsoon forecast. It noted that tyre demand has been relatively more resilient compared to other auto components as the replacement demand in the tyre industry insulates it from cyclicality to a large extent.
In line with the overall auto industry, tyre demand contracted sharply in Q1 FY2021 due to the nationwide lockdown, but recovery in tyre demand was stronger and faster as tyre volumes reached the pre-COVID levels in Q2 FY2021 and witnessed a healthy growth in the subsequent two quarters. Between FY2022 and FY2025, it expects domestic tyre demand to increase at a Compound Annual Growth Rate (CAGR) of 7-9 per cent in units, aided by stable replacement demand, a pick-up in OEM demand and exports.
Start Research-backed Investing ...Now. Subscribe to Sapphire
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: