Tyre Manufacturers To Clock 7-8 Per Cent Growth In FY25, Backed By Surge In Volume, Says CRISIL

The rating agency noted that the manufacturers logged a compound annual growth rate of 21 per cent between the 2020-21 fiscal year to 2022-23 fiscal year

Tyre makers are expected to clock a 7-8 per cent surge in their topline during the current 2024-25 fiscal year (FY25), ratings agency CRISIL Ratings said on Monday. This jump was driven by a 3-4 per cent rise in realisations and volume, the agency said.

This will mark the second consecutive year that the expected revenue growth for tyre makers will be in single digit. The rating agency noted that the manufacturers logged a compound annual growth rate of 21 per cent between the 2020-21 fiscal year to 2022-23 fiscal year, reported PTI.

The agency noted that realisation growth will remain staggered throughout the fiscal year, as firms are planning to gradually increase their prices to manage the rise in the cost of natural rubber.

Volume growth will be backed by replacement demand in the period, the ratings agency stated. It added that the analysis is on the basis of performance of top six tyre manufacturers that account for nearly 87 per cent of the overall revenue of the industry.

Anuj Sethi, Senior Director, CRISIL Ratings noted, “Domestic demand accounts for around 75 per cent 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).This fiscal replacement demand, mainly from commercial and passenger vehicles, will drive volume growth, while OEM demand is expected to rise only 1-2 per cent due to slow growth in commercial vehicle sales.”

In terms of exports, growth is anticipated to remain weak at 2-3 per cent due to muted demand in major markets like Europe and North America as these account for 60 per cent of the overall exports in the country.