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  • Investment Proposal Tyre Industry

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    Sandeep Kumar
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    The tyre industry in India can be segmented into MHCV, PV, and 2/3 wheelers. The replacement market is larger than the OEM market. Radial tyres now account for over 60% of the market compared to 40% for bias tyres in 2019. The top players in the industry are MRF, Apollo Tyres, CEAT, and JK Tyres, who together control over 70% of the market. Key growth drivers for the industry include rising vehicle production, shift towards radial tyres, and potential reduction in anti-dumping duties. However, volatility in raw material prices such as natural rubber and threat of cheap imports pose challenges to the industry.

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    The tyre industry in India can be segmented into MHCV, PV, and 2/3 wheelers. The replacement market is larger than the OEM market. Radial tyres now account for over 60% of the market compared to 40% for bias tyres in 2019. The top players in the industry are MRF, Apollo Tyres, CEAT, and JK Tyres, who together control over 70% of the market. Key growth drivers for the industry include rising vehicle production, shift towards radial tyres, and potential reduction in anti-dumping duties. However, volatility in raw material prices such as natural rubber and threat of cheap imports pose challenges to the industry.

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    104 visualizações3 páginas

    Investment Proposal Tyre Industry

    Enviado por

    Sandeep Kumar
    The tyre industry in India can be segmented into MHCV, PV, and 2/3 wheelers. The replacement market is larger than the OEM market. Radial tyres now account for over 60% of the market compared to 40% for bias tyres in 2019. The top players in the industry are MRF, Apollo Tyres, CEAT, and JK Tyres, who together control over 70% of the market. Key growth drivers for the industry include rising vehicle production, shift towards radial tyres, and potential reduction in anti-dumping duties. However, volatility in raw material prices such as natural rubber and threat of cheap imports pose challenges to the industry.

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    © All Rights Reserved
    Baixe no formato PDF, TXT ou leia online no Scribd
    Sinalizar o conteúdo como inadequado
    de 3

    Sandeep Kumar (sandeep7257@gmail.

    com)

    Tyre Industry Segmentation

    MHCV PV 2/3 Ws

    250 OEM Replacement


    Export
    200 18% 100%
    OEM
    Mn Units

    150 36% 80%

    Radial Tyres
    60%
    100
    40%
    50 Replacement
    20%
    0 46%
    FY FY FY FY FY FY FY FY FY FY FY 0%
    11 12 13 14 15 16 17 E 18 E 19 E20 E 21 E 2009 2014 2019
    Figure: Category wise Sales Figure: Marketwise Sales Figure: Radial Tyre Share

    Industry Fundamentals TVS Others,


    Bridgest Srichakra, 9%
    Threat of Substitues one, 4% 4%

    Birla, 5% MRF,
    Barriers to Entry
    29%
    Balkrish
    Competitive Rivalry
    na, 7%
    Ceat, JK Apollo,
    Bargaining Power of Suppliers 12% Tyres 17%
    Bargaining Power of Buyers , 13%

    Figure: Porter 5 Forces Analysis Figure: Market Share of Major Players Figure: Herfindahl - Hirschman Index

    SGA Domestic (RSS 4 Kottayam) International RSS 4 Thailand


    Nylon Tyre Cord
    9% Fabric
    Natural Rubber
    12% 250
    RUBBER PRICE (RS/KILOGRAM)

    30%

    Misc Expenses 200


    9% Carbon 150
    Black 8%
    100
    Rubber
    Raw Material Chemicals 8%
    Employee Cost 68% 50
    9% Butyl Rubber
    Other PBR 0
    Power & Fuel Cost SBR 3%
    6% 3%
    4% 3% 2010 2012 2014 2016

    Figure: Industry Cost Structure Figure: Domestic VS International Rubber Prices

    Growth drivers for Industry

    Rubber prices are not in a bull run yet


    Sandeep Kumar (sandeep7257@gmail.com)

    Anti-dumping duty by Indian government would soon be a reality; removal of anti-dumping duty by US
    High geographic penetration potential in PV segment and shifting focus towards this segment; mitigating vagaries of cyclicality
    in CV segment
    Radialization of tyre industry; would enable players to earn better margins in comparison to bias tyres
    Strong future outlook, with a CAGR of 9%, for Indian auto sector the prime feeder of tyre industry

    Challenges

    Automotive Tyre Manufacturers Association (ATMA) has asked the Ministry of Commerce for duty free import of natural rubber
    equivalent to deficit in domestic production
    Industry is prone to sharp volatility in natural rubber prices
    Manufacturers are also worried about rampant dumping of Chinese radial tyres for truck bus segment.
    Significant capex by major playesr would put pressure on utilization levels and hamper the operational margins of the industry
    Manufacturers are unable to pass on price rise to OEMs
    Looming threat over export due to cheap Chinese imports
    Very high reliance on automotive industry and a threat of backward integration from major automobile players

    Company Section

    Ceat
    MRF

    JK Tyres Apollo
    Sandeep Kumar (sandeep7257@gmail.com)

    BKT Goodyear

    TVS

    Conclusion

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