- 28 Jun 2024
- ICICI Securities
Media sources indicate price hike undertaken by domestic tyre companies
News: As per media sources, domestic tyre companies have undertaken a price hike of ~1-2.5% with effect from 1st July 2024, in response to rise in key raw material prices (primarily natural rubber).
Views: This comes as a sign of relief for the domestic tyre industry amidst unprecedented rise in natural rubber prices which are currency quoting at ~₹ 200/kg (11 year high). Most of the tyre companies had guided for ~4-5% rise in raw material costs for Q1FY25 vs. Q4FY24 (wherein natural rubber was quoting at ~ ₹180/kg) and indicated at partial pass on the same to end consumers thru ~1-2% price hike. This move shall limit margin fall at the domestic tyre companies with most of them expected to realise and sustain mid-teens EBITDA margin profile. This price hike in our view however does not fully cover the recent rise in RM costs.
Impact: Positive