The tonnage growth is likely to be a shade weaker as the larger T&B OEM tyre segment posts declines
ICRA scales down its earlier estimates for total tyre volume growth for 2013-14 to 2-4% due to the higher than anticipated weakness in the passenger car and Truck & Bus (T&B) segments, says ICRA in its latest study on Indian Tyre Industry. The tonnage growth is likely to be a shade weaker as the larger T&B OEM tyre segment posts declines. This muted volume growth in the tyre industry comes after two consecutive years of weak demand of 5% and -2% during 2011-12 and 2012-13 respectively
According to the report, ICRA’s forecasts estimate a ~1-3% growth in industry revenues during 2013-14 to Rs. 454.0 billion and further by ~6-7% during 2014-15. While the demand outlook for 2013-14 continues to be modest, operating margins are expected to post a ~190-200 bps expansion during 2013-14 supported by a softer raw material scenario and higher export realizations. Companies which can tweak their product mix, by increasing focusing on the relatively high margin non T&B and export segments are likely to post relatively healthier margins. The operating margin however would remain vulnerable to raw material price trends and competitive pressures (in view of large capacity additions).
Source: India Infoline News Service
Published: 17 Jan 2014