Best Tyre Stocks In India

23 April 2024
8 min read
Best Tyre Stocks In India
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(The stocks mentioned in the blog are as per Market Capitalization)

In India, the automotive sector has experienced remarkable growth in recent years, leading to a surge in the need for high-quality tyres. As a result, the Indian market now consists of numerous tyre companies, each offering a wide range of products to cater to diverse consumer needs.

With the rapid expansion of the Indian automotive industry, the nation is set to become the world's third-largest market in the next 5 to 6 years.

Tyre Industry in India - A Brief Overview

India stands as one of the leading global manufacturers of tyres. It offers a range of products, including conventional radial and bias tyres, as well as advanced variants such as smart, puncture-proof, noise-reduction and tyres designed for electric vehicles.

The industry is also expanding its footprint in premium and luxury tyre segments, previously dominated by imports. Furthermore, with the adoption of new technologies such as artificial intelligence and machine learning and compliance with technical and safety regulations, the tyre industry in India is improving its operations and becoming more efficient.

The Indian tyre market is anticipated to reach 192.3 million units by 2026, exhibiting a CAGR of 3.81% from 2021 to 2026. This growth is primarily driven by the development of the Indian automotive industry and government initiatives, including subsidies to promote electric vehicle usage. Additionally, increasing health consciousness among consumers is generating demand for bicycles, creating further opportunities for the tyre market.

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Best Tyre Stocks in India in 2024 as per Market Capitalisation

The table below mentions the top tyre stocks in India for 2024 sorted as per market capitalisation:

S.No.

Best Tyre Company Stocks in India (as per market capitalisation)

1.

MRF Limited

2.

Balkrishna Industries

3.

Apollo Tyres

4.

JK Tyre & Industries

5.

CEAT

*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog.

Overview of Best Tyre Stocks in India as per Market Capitalisation

Here is a comprehensive overview of the top tyre stocks as per market capitalisation:

1) MRF Limited

Headquartered in Chennai, MRF Limited is a rubber tyre manufacturing company. The company’s product segment is divided into tyres, sports goods, funskool, paints & coats and pretreads.

In the tyre segment, MRF offers tyres for a wide range of categories, such as heavy-duty trucks and buses, light trucks, multi-utility vehicles (MUVs), recreational vehicles (RCVs) and passenger cars. Additionally, it provides tyres for motorsports, agricultural or farm use, military applications, forklifts, two-wheelers, three-wheelers and off-road vehicles or earthmovers. 

The company provides tyres for different models of various renowned vehicle brands like Toyota, Volvo, Nissan, Ford, Audi, Hyundai, BMW, Volkswagen, Mahindra, Maruti and more. Moreover, MRF Limited provides services like tyre changing, tyre repair, tyre maintenance, wheel balancing, robotic wheel alignment, nitrogen filling and automatic car wash. 

2) Balkrishna Industries

For more than 30 years, Balkrishna Industries Limited (BKT) has been a leader in designing and making safe, innovative and high-performing tyres for various industries like construction, agriculture, mining, earthmoving and ports.

The company also manufactures tubes and carbon black. Its main products include Off-the-Road tyres, agricultural tyres and industrial tyres. The company's agricultural tyres are used for various applications, including tractors, harvesters, agro trucks, telehandlers and others. Its industrial tyres serve applications such as forklifts, excavators, container handlers, compactors and mobile cranes. 

Additionally, BKT’s off-the-road tyres are used for rigid dump trucks, articulated dump trucks, scrapers, underground mining vehicles, etc. Moreover, BKT serves both original equipment manufacturers (OEMs) and the replacement market.

With 4 manufacturing plants located in Maharashtra, Rajasthan, and Gujarat, BKT distributes its products through third-party distributors and exports them worldwide. BKT also has distribution partners in over 160 countries across 5 continents, allowing it to serve a truly global customer base.

3) Apollo Tyres

Incorporated in 1972, Apollo Tyres Limited is a global tyre manufacturer and the leading brand in India. Apollo markets its products under 2 global brands - Apollo and Vredestein.  It offers tyres for passenger vehicles, commercial vehicles, bicycles, off-the-road vehicles, farms, industrial applications etc. The Vredestein brand provides agricultural tyres,  industrial tyres, car tyres and bicycle tyres. 

It provides tyres for various companies, such as Maruti Suzuki, Hyundai, Toyota, Honda, Tata Motors, Honda, Bajaj, TVS, etc. Some of its popular patterns are Apterra AT2, Aspire 4G, Amazer 4G, Alnac 4G, Altrust, Amazer XP, and Apterra HT2.

Apollo Tyres’ products are accessible in more than 100 countries through an extensive network of branded, exclusive and multi-product outlets. The company operates 7 manufacturing units, with 5 in India and one each in the Netherlands and Hungary. 

4) JK Tyre & Industries

JK Tyre & Industries Limited, an Indian tyre manufacturer, offers comprehensive solutions for various vehicle segments. The company provides passenger car tyres, commercial tyres, farm tyres, two-wheeler tyres, three-wheeler tyres and off-the-road tyres.

It also provides puncture guards to prevent punctures. JK Tyre introduced India's first-ever 'Smart Tyre' technology, featuring Tyre Pressure Monitoring Systems (TPMS) with TREEL Sensors that monitor crucial tyre statistics like pressure and temperature. 

The company and its subsidiaries develop, manufacture, market, and distribute automotive tyres, tubes, flaps, and retreads. JK Tyre primarily operates in multiple segments, including India and Mexico, with a notable presence in 105 countries through over 180 global distributors.

With a network of over 4,000 dealers and more than 500 brand shops named Xpress Wheels, Truck Wheels, and Steel Wheels, JK Tyre operates approximately 12 manufacturing facilities, 9 in India and 3 in Mexico.

5) CEAT

Established in 1958, CEAT stands as one of India's top tyre brands under the flagship company of the RPG GROUP. It provides a wide range of tyres,  tubes, and flaps for a wide range of vehicles, including cars, scooters, bikes, passenger vehicles (PV), light commercial vehicles (LCVs), buses, trucks, tractors, two-wheelers and three-wheelers.

The company caters to popular models such as Maruti Alto, Wagon R, Honda Shine, Swift, Dzire, Hero Splendor, Passion, Activa, Suzuki Access, TVS Jupiter and others. 

Through its e-commerce website, customers can opt for doorstep tyre delivery, fitment at home or pick up from an authorised store. CEAT runs factories in Nashik, Mumbai, Halol and Ambernath, along with other cities across India. Furthermore, it exports its products to the US, Bangladesh, Sri Lanka and the Netherlands.

Factors to Consider Before Investing in Tyre Stocks in India

Here are some crucial factors you must consider before you buy tyre stocks:

  • Raw Materials

You must keep an eye on the prices of crude oil and natural rubber, as they directly impact the gross margins of tyre companies in India. The decline in these prices affects the profitability of tyre stocks by influencing the total production cost.

  • Lifespan of Tyres

Technological advancements leading to longer-lasting tyres mean consumers are now seeking higher-quality products. Investors should evaluate how tyre companies are adapting to this demand for durability and whether they are investing in research and development to stay competitive in the market.

  • Government Policies and Trade Dynamics

Take note of how government policies on import and export affect the tyre manufacturing industry. Regulations on trade agreements and tariffs directly influence the cost of raw materials and the competitiveness of Indian tyre manufacturers globally.

  • Expansion of Tyre Buying and Selling Business

The growth of e-commerce in the tyre market has intensified competition and driven down prices, benefiting consumers. You should consider how tyre companies are adapting to this shift to capture market share in the online space.

  • Supply Chain Resilience

You must evaluate how well tyre companies manage their supply chains. A robust supply chain ensures a continuous flow of materials and products, even in the face of disruptions. Companies with resilient supply chains are often better positioned to adapt to changing market conditions, potentially leading to improved stock performance over time.

  • Company’s Financial Performance

Go through the past financial reports of tyre companies to understand their revenue growth, market share, debt-to-equity ratio, cash flow statements, net income and profitability. Analysing these factors will provide valuable insights into the financial health and stability of the company.

Should You Invest in Tyre Stocks?

While the tyre sector has shown resilience and growth, it is important to understand its significant challenges and risks. Fluctuations in raw material prices pose a constant risk to tyre manufacturers, impacting their production costs and profit margins. Additionally, high competition from other tyres presents a challenge, influencing market dynamics and affecting the performance of tyre stocks. 

Moreover, changes in consumer preferences towards tyre brands and product specifications can further impact the market position of tyre companies.

Evaluating these factors, along with economic trends in vehicle sales, is crucial to making informed investment decisions in tyre stocks. In addition, careful consideration of your risk appetite and your financial goals is essential when selecting the top tyre sector stocks in India for your investment portfolio.

The Bottom Line 

Investing in the best tyre stocks in India can be profitable if approached carefully. Numerous companies boast strong market positions; however, it is crucial to conduct thorough research and seek advice from experts before investing in any tyre company.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. 

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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