Domestic tyre demand is estimated to grow by 5-7% in FY2027, supported by stable growth in replacement demand. While the OE demand has been strong in H1, impact from adverse monsoons or an El Nino event on rural cash flows, or material inflation in tyre prices amid rising input costs, could pose downside risks. Operating margins to contract by ~200 bps YoY in FY2027, with sharp spike in raw material costs owing to increase in crude prices.

• Industry revenues grew by 15.4% on a year-over-year (YoY) basis in Q1 FY2027, on the back of steep price hikes taken by OEMs to pass-on input cost inflation to consumers.
  
• Tyre import volumes increased YoY by 22% in Q1 FY2027. However, the share of imports in the total demand pie is less than 5% and is unlikely to materially affect domestic capacity utilisation.
  

Exhibit: Trend in quarterly revenues and YoY growth

Source: Company filings and ICRA Research; data pertains to the sample of seven of the largest tyre companies in India ; Note: Revenue growth impacted by a merger in FY2026