Indians are growingly accommodating their transportation needs with cars. Automobile industry in India may reach the mark of US$ 54.84 billion by FY 2027. It provides the growth opportunity for other industries indirectly linked to the automobile sector.
Tyre and allied industry is a crucial driving force for the growth of the automobile sector. Investing in raw materials may also provide an indirect advantage of growth. The tyre industry in India is concerned with strong brand names. Branding of various tyre companies has been established over several years.
Investors may benefit from their portfolio with such a unique investment option. However, proper analysis of investment is a prerequisite. Let us explore the top 5 tyre and allied industry companies in detail.
Tyre and allied industry overview
Indian tyre and allied industries include companies involved in the direct manufacturing of tyres and companies associated with the manufacturing of raw materials for it, like rubber. India’s growing per capita income has the potential to benefit the investment in the tyre industry. The Indian electric vehicle (EV) space is forecasted to grow at 66% CAGR by 2029 and it can also potentially provide opportunity to the tyre industry.
Moreover, in the first quarter of FY25, the exports of tyre products from India grew by nearly 17% to prominent countries like the United States of America. This growth may provide an opportunity for the investors.
Here are the top 5 tyre and allied industry companies based on FY24 revenue.
- MRF Ltd
This Chennai-based company is the shining star of tyre and allied industry in the world. It provides tyres for two-wheelers, farm tractors, passenger vehicles, etc. Established in 1946, the company earns nearly 92% of its revenue from Indian markets as of FY24. The company has mainly four subsidiaries:
- MRF Corp Ltd
- MRF International Ltd
- MRF Lanka (P) Ltd
- MRF SG PTE LTD
The core reason behind the strong branding of the Madras Rubber Factory (MRF) is its capability to innovate and match the market dynamics.
An interesting read: Why is each share of MRF worth ONE LAKH rupees?
- Apollo Tyres Ltd
The company has mainly two brands: Apollo and Vredestein. The company has mainly two brands: Apollo and Vredestein. An extensive network of 8400 distributors (as of FY24) has helped the company conquer a strong market share in India. Moreover, it spans across Europe, the Middle East and North America. FY24 was special for the company as it has surpassed even some of its FY26 targets.
Maintaining strongholds in the manufacturing and replacement markets has proven beneficial for the company. The company has manufacturing units in some cities like:
- Vadodara
- Chennai
- Trichur
- Chittoor, etc.
- JK Tyre and Industries Ltd
The company stands strong among the top 25 tyre manufacturing companies in the world as of FY24. It has a diverse range of tyres for vehicles like trucks, buses, cars, tractors, etc. Plants for JK Tyres are located mainly in India and Mexico and all of them are operating impressively at 90% of their capacity. The company has more than 6000 dealers and distributors across various countries.
- CEAT Ltd
It is one of the most known tyre and allied industry brands in the country. It operates in 7 different countries, all over the world and has established plants in 6 Indian cities. It has a network of more than 59000 distributors, as of FY24.
Established in 1958, the company’s growth is evident in its branding. The company has collaborated with top sportspersons and actors. The stock has a price-to-earnings ratio of 17, lower than the industry median.
Also, read this: CEAT vs MRF: Comparing Growth Trajectories
- Balkrishna Industries Ltd
Since its inception in 1987, the company has had a specific tyre production segment for agricultural and industrial use. It earns nearly 71% of its income from exports to countries such as:
- Australia
- Europe
- United States of America, etc.
The specific segment of ‘Off-Highway Tire’ is its forte and contributes significantly to export revenue. This segment contributes notably to the total sales.
Financial comparison of FY24
(Amount in crores)
| Particulars | MRF | Apollo Tyres | JK Tyres | CEAT | Balkrishna Industries |
| Revenue from operations | ₹24,673.6 | ₹17,235.1 | ₹14,922.7 | ₹11,765.3 | ₹9,298.7 |
| Net profit margin | 8.2% | 6.5% | 5.7% | 5.4% | 15.4% |
| Return on equity | 13.2% | 11.5% | 17.41% | 15.9% | 17.4% |
| Debt to equity | 0.05 | 0.30 | 0.60 | 0.39 | 0.34 |
| Net worth | ₹16,441 | ₹13,902.2 | ₹4,486.7 | ₹4,042.6 | ₹8853.8 |
Source: FY24 Annual Report
SWOT analysis
| Particulars | MRF | Apollo Tyres | JK Tyres | CEAT | Balkrishna Industries |
| Strength | Its brand value is the biggest moat for the company. Moreover, an expensive share price provides a competitive advantage | Strong market share of 30% in the bus and truck tyre segment as per management. | Supplier to leading automobile companies like Hyundai, Maruti Suzuki, Tata Motors, etc. | Widespread reach in the market through its distributors network, and revenue is well-diversified among its products. | The main strength of the company lies in its export and off-highway tyre segments. |
| Weakness | Compared to other share prices and brands, the company is delivering a low return on equity. It may discourage investors. | The brand and reach are strong. However, the sales growth is weak compared to competitors in the market. | Significant decrease in the net cash flow of the company despite overall profitability. | Negative net cash flow may be a point of concern for investors. | A high P/E ratio indicates slight overvaluation in the company’s share price. |
| Opportunity | With growing per capita income, the automobile industry and allied tyre group may also experience a rise. | The company has brought the premium Vredestein brand to India. It may increase its overall market share in the country. | The company is trying to penetrate the markets of Europe and Australia with a varied product range. | The company is planning to tap the rural market segment, owing to evolving mobility aspects. | In Q1 FY25, the company has invested nearly ₹1300 crores for the new investment in capex. |
| Threats | Raw material cost head forms the largest share of total cost. The global situation may affect its supply. | An intense price war among the tyre and allied services may affect the total revenue. | Branding has been a key success driver for this industry. JK Tyres misses this part and it may affect them in the future. | High material costs may affect the raw material supply and pricing in the future. | Global markets are volatile due to geopolitical situations, and any new entry may disturb the company’s revenue. |
Bottomline
The tyre and allied industry in India can be a hidden gem for investment in India. The growth in the automobile industry owes much of its part to this sector. Moreover, the Indian companies in this segment have established strong branding over several years. Investors can participate in this growth and experience the rush. However, investment precedes a detailed analysis to avoid any loopholes.
Check this out: Exploring the intricacies of share valuation
