Icra expects domestic tyre demand to grow 6-8% in FY24

livemint.com:

Icra Ltd on Wednesday said it maintains its year-on-year (YoY) growth forecast for domestic tyre demand for the current financial year (FY24) at 6-8%. This projection, it said, is supported by favourable demand from original equipment manufacturers (OEM) and an expected revival in the replacements market .

“We expect the revenue growth to moderate to 5-7% YoY in FY24, led by a 6-8% YoY growth in domestic tyre demand, likely decline in exports, and flat average realisations," said Nithya Debbadi, assistant vice president and sector head, Corporate Ratings, Icra. “Icra expects the margins to expand by 200-300 bps in FY24 amid better product mix and range-bound input costs, thus supporting the overall earnings profile of industry players," said Debbadi.

The OEM segment is anticipated to experience a growth rate of 7-9% YoY in FY24, driven by promising prospects across most product categories, said the rating agency. Passenger vehicle (PV) demand is expected to be supported by a reduction in supply-related challenges, growing preference for personal mobility, and an increase in disposable income among consumers.  Similarly, demand for commercial vehicles (CV) is likely to continue benefiting from infrastructure and construction activities.

The two-wheelers segment has observed a gradual recovery and future momentum will hinge on the performance of the monsoon season. Icra expects mid-single-digit growth in the replacement segment in FY24.

Following two years of pent-up demand and an increase in prices, volume growth is likely to witness some stabilisation in the current financial year. The demand was subdued to some extent in the last 2-3 months, although the same is likely to recover with improving urban and rural