Industry Overview
India’s automobile market grew by 5.2 percent in FY19 compared to 14.2 percent and 6.8 percent growth in FY18 and FY17 respectively. The passenger vehicle (PV) segment posted a slower growth of 2.7 percent for FY19 compared to the growth of 7.9 percent, 9.2 percent and 7.2 percent for the previous fiscal years. The commercial vehicle (CV) segment continued to witness strong growth as it expanded by 17.5 percent for the financial year whereas two-wheelers witnessed a decline in growth of 4.9 percent as compared to 14.8 percent in the previous fiscal year.
The overall automotive sector has been plagued with slow growth despite which the tire industry has had a stable performance during FY19. As per the Automotive Tyre Manufacturers’ Association, the industry witnessed double-digit growth of 11 percent during FY19 to an estimated ₹63,000 crore. The CV segment continued to deliver impressive results and recorded a growth of 16 percent. On the other hand, the PV segment posted flat growth during the year. The domestic tire demand is expected to go up by 3-4 percent during FY20. On the basis of comments by tire makers, the industry is set to invest ₹17,000 crores by FY22, part of which is expected to be funded by debt. With the industry’s capitalization and coverage indicators expected to remain stable for the long-term, the industry revenue is assumed to increase by 6-8 percent.
Rubber Industry Overview
This story is from the February 3, 2020 edition of Dalal Street Investment Journal.
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This story is from the February 3, 2020 edition of Dalal Street Investment Journal.
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