CEAT and other tyre shares gain in Monday's trade; here is why

CEAT Ltd on Friday announced a price cut across its entire range of tyres to pass on the benefits of the GST rate reduction.

The company said it will be passing on 100% of the benefit to their channel and customers, as GST on new pneumatic tyres has been reduced to 18% from 28%, while tractor tyres and tubes will attract a reduced GST rate of 5%, PTI reported.

The reduced prices, reflecting the new GST rates, will be applicable on all CEAT products effective September 22, 2025, it added.

"The reduced GST slabs will greatly benefit the tyre industry and consumers alike. Not only will it lower the cost of owning and operating a vehicle for customers across various segments, but by making tyres more affordable to replace, it will also make our roads safer," CEAT Managing Director & CEO Arnab Banerjee said.

He further said, "All in all, the move will spur formalisation and greater compliance, while also fostering sustainable growth in the sector."

Other tyre companies are also expected to announce a price cut following the GST rate rationalisation.

Among individual names, shares of CEAT Ltd were trading over 1% higher at ₹3,315.60 apiece on the NSE, up over 1%. JK Tyre & Industries was trading around 0.5% higher at ₹370.65.

MRF Ltd shares were trading 1% higher at ₹1,48,100 apiece, while Apollo Tyres was trading around 1% higher at ₹479.50 on the NSE.

Indian Tyre Market Outlook

The India tyre market, according to Markets and Data, a research firm, is experiencing robust growth of 8.71% compound annual growth rate (CAGR) during the forecast period 2023-2030 and is projected to reach $25.50 billion by FY 2031 from $13.11 billion in FY 2023, mainly owing to the rapidly growing automotive industry in the country.

Tyres play a crucial role in ensuring vehicle safety and performance, making them an essential component of the automotive ecosystem. In recent years, the market has witnessed several key drivers that have propelled its growth. With the rising disposable income and growing middle-class population, there has been a surge in demand for passenger and commercial vehicles. This has directly translated into increased demand for tyres. Additionally, government initiatives such as "Make in India" and the push for electric vehicles have further contributed to the market's growth.

Another important driver is the focus on road infrastructure development. The Indian government has been investing heavily in building new roads and highways for better connectivity, which has led to an increase in vehicle sales and subsequently boosted the demand for tyres.

Different variants of tyres

Tyre variants can be categorised by their application and design (e.g., all-season, summer, winter, all-terrain, performance, run-flat) and by their construction type (e.g., radial, bias-ply, tubeless, tubed).

Top tyre companies in India

Some of the leading names in the Indian tyre industry are MRF Ltd, CEAT Ltd, JK Tyres, and Goodyear, among others.

It must be noted that rubber is a key raw material used in the manufacturing of tyres, with both natural and synthetic rubber combined to create the tyre's durable, flexible, and high-grip components.

Hence, generally, a fall in rubber prices is positive for tyre companies.