A Crisil Ratings report has pegged the domestic tyre industry’s revenue growth at 7-8 per cent this fiscal, driven mostly by replacement demand that accounts for half of annual sales.
In fact, the segment is estimated to post growth even as offtake by original equipment manufacturers (OEMs) is likely to be subdued while rising premiumisation will give a slight leg-up to realisations.
In an analyst call, JK Tyre & Industries MD, Anshuman Singhania, agreed with the statistics of the report, saying growth in the export-heavy manufacturing sector with outbound shipments surpassed ₹25,000 crore in FY25.
"In FY26, the Indian tyre industry is expected to achieve 7-8 per cent growth on the back of the strong domestic replacement demand despite muted OE (original equipment) offtakes," Singhania said, noting consistent investments in capacity expansion, improvements in manufacturing efficiency and increased focus on enhancing the R&D capabilities to have played their part.
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"With the upcoming festive season, coupled with the benefits of the recent repo rate cuts and favourable monsoon conditions, we expect the consumer sentiments to improve further," Singhania said.
Apollo Tyres CFO, Gaurav Kumar, said he too expects the demand momentum to improve in the second half of the fiscal year, with a rebound in infrastructure and mining segments post-monsoon.
"Moving on to the raw material outlook, we expect the raw material cost to be slightly lower in Q2 vis-a-vis the current levels. However, with a bit of uncertainty given on the exchange rates that are currently prevailing," he added.
Meanwhile, domestic tyre demand from Original Equipment Manufacturers (OEMs) in commercial and passenger vehicle segments is likely to lag the growth in two-wheelers, observed Icra Senior Vice President & Co-Group Head (Corporate Ratings), Srikumar Krishnamurthy.
"Replacement demand, which represents the largest pie of the tyre industry, is expected to be supported by factors like favourable rural sentiments, festive demand, and expected rate cut effect on consumption, even as urban demand is soft," he added, while warning that exports are likely to face headwinds from ongoing geopolitical developments and uncertainties around US tariffs.
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