Ratings agency ICRA is maintaining the domestic demand growth in volumes estimate for the Indian tyre industry at 13-15 percent for the ongoing fiscal year (FY22) and 7-9 percent for the FY22-25 period. It said while the stable demand from replacement and export segments support industry revenues, earnings have been affected by elevated input prices. Following two years of contraction -- down 9 per cent each in FY20 and FY21 -- amid sharp contraction in vehicle sales and COVID-19, it said tyre demand has recovered sharply in FY22.
However, the report said the impact of the pandemic on tyre demand has been relatively less compared to other auto components. It said this is given its higher skew (around 60 per cent) on the after-market segment. It stated that the tyre industry is relatively better protected from any potential impact of Omicron due to its large dependence on the stable replacement market and learnings from earlier waves.
ICRA expects industry revenue growth of 16-20 per cent in FY2022, driven by growth in volumes and realisations. It said while the demand is favourable, higher input prices (namely natural rubber and crude derivatives) keep industry margins and earnings under pressure. It added that replacement volumes are at record-high levels with improving economic activities while OE (original equipment) sales are partly affected by the sluggish demand for two-wheelers and supply constraints impacting passenger vehicle production.
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: