Tyre makers to see 7-8% revenue growth in FY2024-25 amid rising input costs: Crisil Ratings

Indian tyre manufacturers are projected to register a revenue growth of 7-8% in the current fiscal year, Crisil Ratings said on Monday, marking the second consecutive year of single-digit revenue growth.

Meanwhile, volume growth is being driven primarily by replacement demand in commercial and passenger vehicles, as demand from original equipment manufacturers (OEMs) is expected to rise by only 1-2%, constrained by sluggish commercial vehicle sales, it noted.

Anuj Sethi, Senior Director, CRISIL Ratings, said, “Domestic demand accounts for ~75% of the industry’s sales (in tonnage terms), while the rest is exported. About two-thirds of the domestic demand is from the replacement segment and the rest is from original equipment manufacturers (OEMs).”

Exports, which make up about 25% of the sector’s sales, are likely to see muted growth of 2-3% due to subdued demand in major markets such as North America and Europe, coupled with supply chain disruptions and elevated freight costs.

However, rising raw material prices are set to squeeze operating margins, according to the report. Natural rubber prices have surged globally due to adverse weather in leading producing nations like Thailand and Vietnam.

"The other key raw materials in tyre production, such as nylon tyre cord, carbon black, styrene butadiene rubber and poly-butadiene rubber, are derivatives of crude oil and, hence, subject to price fluctuations," Crisil Ratings said.