Tyre Stocks
Tyres are a vital component of India’s automotive industry, and tyre stocks offer investors access to both domestic consumption trends and global demand for mobility. These companies serve original equipment manufacturers (OEMs), replacement markets, and export customers across geographies. As India’s road infrastructure improves and personal vehicle ownership increases, the demand for high-quality, fuel-efficient tyres continues to expand. With the added advantage of recurring replacement cycles and price resilience in certain market segments, the best tyre stocks present long-term investment opportunities in the industrial and consumer goods space.
List of Tyre Stocks
| Company Name | Market Price | Market Cap | 52W Low | 52W High | Prev. Close | 1W Return | 1M Return | 6M Return | 1Y Return | 3Y Return | Dividend Yield | PE Ratio | Industry PE |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1,47,505.00 -620.00 (-0.42%)â–¼ | 62558.98 | 102124.05 | 153000 | 148125 | 6.52 % | -0.45 % | 35.00 % | 5.65 % | 73.89 % | 0.16 | 35.86 | 34.21 | |
2,396.10 -17.90 (-0.74%)â–¼ | 46320.73 | 2152.05 | 3155.8 | 2414 | -0.15 % | -13.09 % | -11.53 % | -16.51 % | 13.16 % | 0.67 | 32.14 | 34.21 | |
465.75 +1.05 (+0.23%)â–² | 29579.83 | 370.9 | 584.9 | 464.7 | 7.74 % | 3.60 % | 13.97 % | -8.24 % | 86.41 % | 1.07 | 44.85 | 34.21 | |
3,184.50 +2.10 (+0.07%)â–² | 12881.33 | 2343.05 | 4044 | 3182.4 | 3.01 % | -8.84 % | 16.48 % | 11.15 % | 129.98 % | 0.94 | 25.9 | 34.21 | |
324.95 -4.50 (-1.37%)â–¼ | 8904.28 | 243 | 453 | 329.45 | 4.17 % | -7.97 % | 11.27 % | -21.79 % | 146.55 % | 0.92 | 21.08 | 34.21 | |
2,890.40 -33.10 (-1.13%)â–¼ | 2214.05 | 2431.8 | 4900 | 2923.5 | 1.87 % | -6.45 % | 1.90 % | -39.29 % | 38.86 % | 0.58 | 58.74 | 34.21 | |
149.83 +5.13 (+3.55%)â–² | 591.96 | 107.72 | 259.2 | 144.7 | 3.23 % | -8.37 % | 14.91 % | 0.00 % | 0.00 % | 0 | 29.24 | 34.21 |
What are tyre stocks?
Tyre stocks are shares of companies that design, manufacture, and market tyres for a range of vehicles – cars, two-wheelers, trucks, tractors, buses, off-road machinery, and even aircraft. The industry broadly caters to two markets: the OEM segment and the aftermarket. While OEM sales are linked to new vehicle production, the aftermarket or replacement segment, which contributes over 60% of sales for most companies, is more stable and margin friendly.
These companies rely on key raw materials such as natural rubber, synthetic rubber, carbon black, and crude oil derivatives. India's tyre market is one of the largest globally, and players are increasingly focusing on R&D for radialisation, tubeless technology, and fuel-saving tyres. Exports are also growing as Indian firms meet international standards and supply tyres to Europe, the US, and Asia. Many tyre manufacturers are integrated with backward supply chains and possess strong distribution networks, making them resilient and scalable in both domestic and international markets.
Why invest in tyre stocks?
- Recurring demand from replacement market: Tyres wear out and require regular replacement, ensuring consistent revenue.
- Growth in auto sales: Rising ownership of passenger vehicles and two-wheelers supports volume growth.
- Commercial vehicle revival: Infrastructure projects and logistics expansion fuel demand for truck and bus tyres.
- Export expansion: Indian tyre companies are gaining market share globally due to cost and quality advantages.
- Strong rural demand: Two-wheelers and tractors, heavily used in rural areas, drive a large portion of tyre volumes.
- Premiumisation trend: Consumer demand for better grip, tubeless, and radial tyres enables premium pricing.
- Brand loyalty and service: Leading players benefit from strong dealer relationships and post-sale service networks.
- OEM contracts: Long-term contracts with auto manufacturers ensure bulk orders and predictable cash flows.
Advantages of investing in tyre stocks
- Dual revenue streams: Companies sell to both OEMs and aftermarket, reducing dependence on one channel.
- Stable cash flows: Replacement demand generates recurring revenue, even during auto sector downturns.
- Margin improvement through integration: Backward integration into rubber processing and chemical production helps contain costs.
- Export competitiveness: Indian tyre firms benefit from favourable production costs and international quality certifications.
- Anti-dumping protection: Import tariffs and duties protect domestic firms from cheaper Chinese and Southeast Asian imports.
- Strong dealer networks: Pan-India reach with dedicated dealers and service centres builds brand loyalty and customer retention.
- Technological innovation: Companies are investing in smart tyres, retreading technology, and fuel-saving designs.
- Government policy tailwinds: PLI schemes for auto components, Make in India initiatives, and road infrastructure boost sector outlook.
- Resilience during recessions: Although OEM sales dip in slowdowns, tyre replacements continue across fleets and personal vehicles.
- Attractive valuations: Many tyre stocks trade at lower valuations compared to other auto ancillary sectors, offering scope for rerating.
Points to consider before investing in tyre stocks
- Volatile raw material costs: Rubber, crude-based chemicals, and carbon black prices impact input costs and margins.
- Forex fluctuations: Import dependence for some inputs and export revenue in USD exposes firms to currency volatility.
- Auto sector dependency: Tyre demand is indirectly linked to automobile production and overall auto sector health.
- Capital-intensive expansion: Setting up new radial tyre plants or expanding capacity involves large capex with long payback periods.
- Cyclicality of commercial demand: Truck and bus tyre sales fluctuate with GDP growth, freight movement, and infrastructure activity.
- Environmental regulations: Norms around rolling resistance, emissions, and recyclability may raise compliance costs.
- Competition from global brands: Global players entering the Indian market with premium offerings increase pricing pressure.
- Inventory and working capital management: Companies must manage large inventories across product variants and regions, affecting efficiency.
- Dealer dependence: Over-reliance on dealer relationships can make it difficult to control end-customer experience in highly competitive markets.
- Technological lag: Delay in adopting smart or specialty tyre technologies can reduce competitiveness in export markets.
How to invest in tyre stocks
- Shortlist leading players: Focus on companies with established brands, global presence, and diversified customer base.
- Open a demat account: Use a SEBI-registered broker to buy the best tyre stocks on the NSE or BSE.
- Study raw material strategy: Review sourcing practices for rubber, carbon black, and synthetic materials.
- Compare segment mix: Analyse the company’s exposure to OEMs, replacement, and exports, each has different margin profiles.
- Evaluate capacity and expansion plans: New plants, especially radialisation and export-oriented units, can boost long-term growth.
- Check return metrics: Review ROCE, asset turnover ratio, and EBITDA margin trends.
- Watch for policy announcements: Government decisions on import duties, scrap page policy, and road development impact sector health.
- Diversify holdings: Hold a mix of companies with varying exposure to domestic and global markets for better stability.
- Follow auto sales data: Monthly auto sales figures are a leading indicator of OEM tyre demand.
- Assess export pipelines: Firms with rising international orders and compliance with EU/US norms are more resilient to local downturns.
Tyre Stocks FAQs
Are there risks associated with investing in tyre stocks?
Yes. The sector faces risks from input cost volatility, global commodity fluctuations, and cyclical trends in automobile sales. Currency movements can impact both imported raw material costs and export realizations, while demand for commercial vehicle tyres is highly sensitive to economic cycles.
Is diversification important when investing in tyre stocks?
Absolutely. Exposure to companies that serve multiple vehicle segments like two-wheelers, cars, trucks, tractors, and across domestic and international markets helps mitigate risk. It’s also important to balance exposure between OEM-focused and aftermarket-heavy firms.
How to identify promising tyre stocks?
Look for companies with backward integration, strong EBITDA margins, brand recognition, and presence in both OEM and replacement markets. Export-driven players with consistent capacity expansion and investment in R&D typically offer stronger long-term prospects.
How to analyse the financial performance of tyre stocks?
Key metrics include operating margins, return on capital employed, raw material cost trends, and volume growth. Compare revenue composition across OEM and replacement, track debt levels, and examine fixed asset turnover ratios to assess operational efficiency.
How does the tyre sector perform during downturns or recessions?
OEM tyre sales may decline due to lower vehicle production, but the replacement market remains resilient. Tyres wear out regardless of economic conditions, making aftermarket sales a buffer during slowdowns. Well-diversified players usually outperform peers during downturns.
Is it worth investing in the tyre sector?
Yes. With recurring demand, strong export potential, and increased focus on technology and premiumisation, the tyre sector offers attractive long-term opportunities. Properly selected tyre stocks can serve as a cyclical and value-oriented addition to your portfolio.
Disclaimer: By referring to any particular sector, Kotak Securities Limited does not provide any promise or assurance of favourable view for a particular industry or sector or business group in any manner. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and take professional advice before investing. Such representations are not indicative of future results.