Indian Tyre Industry Update - Ready To Roll: Motilal Oswal

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Motilal Oswal Report

The Indian tyre industry is expected to recover from five years of weakness and be on a linear growth path (~12% compound annual growth rate over FY21-25E), supported by timely capacity expansion across companies.

Improving demand, stable competitive intensity, and peak capex (capex of Rs 116 billion over FY22-24E versus Rs 135.5 billion over FY19-21) augurs well for profitability.

We estimate two-wheeler/passenger car radial /truck and bus tyre volumes to clock 8%/11%/13% CAGR over FY21-25E.

This coupled with a reasonable pricing environment and operating leverage, will enable a recovery in profitability and capital efficiency.

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