Domestic Tyre Industry Rolls Towards Steady Growth Amid Challenges

The domestic tyre industry is projected to grow by 7-8% this fiscal year, bolstered by replacement demand. Challenges include US tariffs and potential Chinese dumping. Nevertheless, steady profitability, strong domestic demand, and robust financial health should sustain a stable credit outlook.

The domestic tyre industry is set to experience revenue growth of 7-8% this fiscal year, primarily driven by replacement demand. According to Crisil Ratings, replacement sales constitute half of the annual sales for the sector.

Despite subdued OEM offtake, rising premiumisation could slightly boost realisations. However, the report warns of potential issues, such as escalating trade tensions and the risk of Chinese producers dumping inventories in the wake of US tariffs.

Operating profitability is expected to remain steady between 13-13.5%, aided by stable input costs and efficient capacity utilisation. These factors, alongside strong financials and cautious capital spending, should uphold the sector's stable credit outlook.

(With inputs from agencies.)