Domestic tyre sale volumes expected to see moderate growth of 4-6% this fiscal: ICRA
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Ratings agency Icra has said that domestic tyre sale volumes are expected to see a moderate growth of 4-6 per cent this fiscal after witnessing an estimated pace of 6-8 per cent in the previous financial year. This growth in the last fiscal was driven by factors such as elevated base and subdued growth in the commercial vehicle (CV) segment.
However, Icra anticipates domestic demand from original equipment manufacturers (OEMs) in certain consumer segments like PV (passenger vehicle) and two-wheeler as well as for replacement to remain healthy, supporting overall tyre volume expansion in FY25. It stated while revenues are likely to expand by 5-7 per cent this fiscal, high natural rubber prices and increasing crude prices are likely to moderate the tyre industry's margins by 200-300 basis points (bps) in FY25.
The rating agency also said it expects the replacement market, which contributes to over two-thirds of the industry volumes, to remain stable, aided by healthy demand across the segments. Tyre export volumes, which contribute approximately 25 per cent of industry's sales (by value), are estimated to have recorded a low single-digit growth in FY24 after contracting by around 7 per cent in FY23, owing to demand shrinkage in key markets amid inflationary pressure and higher interest rates.
