iStockICRA said that tire imports continue to remain low due to government regulation, which is beneficial for domestic companies.

The credit rating agency ICRA on Monday said it expects domestic demand growth in the Indian tire industry to remain at 13% to 15% in the current and seventh fiscal. It was at-9% during FY22-25. Stable demand from substitutes and the export sector supported the industry’s margins, but profits were impacted by higher investment prices, ICRA said in a statement.

It added that ICRA 2022 maintains India’s tire demand FY-on-FY growth of 13-15% forecasting industry growth at 7-9% (2022-25%) FY CAGR).

Tire demand experienced two years of contraction (2020) 9% y-o-y decline due to sharp fall in automobile sales and COVID-19, 21 Credit rating agencies said that tire demand declined by 21% in 2022) recovered sharply in 2022.

“However, the impact of the epidemic on tire demand has been relatively small compared to other automotive components because of the higher slope of the aftermarket (~60%),” he added.

ICRA He said the tire industry is relatively better protected from Omicron’s potential impacts due to its reliance on stable alternative markets and early lessons learned.

Debbadi, Vice Chairman and Sector Head, ICRA “We expect industry revenues to grow by 16-20% in FY2022, driven by increased production and realization. Demand is good, but higher investment prices (e.g. natural rubber and rubber) crude oil derivatives) are putting pressure on industry margins and profits.

She added that with improved economic activity, substitutes have reached an all-time high and sales of original equipment have been impacted by weak demand for two-wheelers and supply constraints in passenger car production.

Debbadi He said, “ICRA Tire Manufacturers Sample reached 25% strong year-on-year growth with record sales in the second quarter of fiscal 2022, driven by favorable substitutes and export volumes.” He added that revenue growth in the industry is being significantly offset by high price growth due to raw material inflation.

Despite the industry’s higher prices, “we expect operating margins to decline 400 to 600 in fiscal 2022 2022,” she said Fiscal year but compared to COVID-19, which compares favorably to previous levels.”

With the growing acceptance of Indian tires in overseas markets, tire exports have grown significantly this year due to good demand from countries like the US and Europe.

ICRA said that domestic companies are benefiting as tire imports continue to remain low due to government regulations.