Tyre stocks in focus: Shares of CEAT, JK Tyre & Industries, and MRF have surged following the release of their March quarter results. Strong financial performance, upbeat management commentary, and continued bullish sentiment from analysts have encouraged investors to increase their exposure to the tyre sector, driving stock prices up by over 20%.
Ceat’s share price has jumped from ₹3,060 to ₹3,728 over 16 trading sessions, resulting in a 22% gain following the release of its March quarter results on April 30. The strong performance also pushed the stock past the ₹4,000 mark for the first time, hitting a fresh all-time high of ₹4,044 apiece.
Likewise, JK Tyre’s share price rose over 9% after its March quarter results, while MRF gained 7% following its Q4 figures. Apollo Tyres also saw its share price increase by 5.5%.
Replacement demand and stable input costs support tyre makers in Q4FY24
Despite tepid demand for new tyres during the reporting quarter, strong replacement demand from retail customers supported healthy volume growth for tyre manufacturers. In recent quarters, sluggish passenger vehicle sales have prompted tyre makers to increasingly rely on the replacement market to drive overall volumes.
A key positive in the March quarter was the stability in raw material prices compared to Q3. However, some of that benefit was partially offset by the depreciation of the rupee against the US dollar. Tyre companies also implemented price hikes during the year, which helped cushion the impact of elevated input costs.
Looking ahead to FY26, tyre companies have shared a positive outlook. CEAT expects continued double-digit growth, driven primarily by rising demand in the premium tyre segment. The company recently launched three new premium tyres — Run Flat Tyres, Z-rated 21-inch radials, and CALM tyres designed for EVs.
CEAT currently holds a market share of 20–25% in the electric two-wheeler (E2W) and electric passenger vehicle (E-PV) segments and aims to maintain this share through new order wins. JK Tyre also noted that its premiumization strategy is yielding positive results.
Its premium products — including Leuitas Ultra, Smart Tyre, Ranger Series, and Puncture Guard tyres in the passenger vehicle segment, along with the XF, XM, and XD series in the commercial segment —the company said are witnessing strong market traction.
Analysts remain bullish on tyre stocks
Analysts remain optimistic about the tyre sector’s outlook, citing improving margin potential driven by a sharp decline in crude oil-based raw material costs and easing domestic rubber prices. Crude oil prices have fallen nearly 18% so far this year, which is expected to benefit oil-sensitive sectors like tyres.
Following the strong March quarter performance, several domestic and global brokerage firms have reaffirmed their positive stance on leading tyre companies. Japanese brokerage firm Nomura upgraded CEAT stock to ‘buy’ from Neutral, raising its target price to ₹3,945 from ₹3,051.
Emkay Global also maintained a ‘buy’ rating and increased CEAT’s share price target to ₹4,100, while Motilal Oswal reiterated its ‘buy’ rating with a target of ₹3,818, noting CEAT’s strategic focus on segments like passenger vehicles, two-wheelers, off-highway tyres, and exports, along with disciplined capex, is likely to support long-term margin and free cash flow improvement.
Global brokerage CLSA raised its price target on MRF, one of India’s most expensive stock, to ₹168,426 from ₹128,599, maintaining its ‘outperform’ rating. CLSA’s new target is the highest on the Street, surpassing Anand Rathi’s earlier peak of ₹160,000.
CLSA added that MRF’s superior product portfolio has enabled it to outperform peers and could help it generate free cash flow of ₹2,700 crore by FY27. In the case of Apollo Tyres, Motilal Oswal maintained its ‘buy’ rating with a target price of ₹554.
ICICI Securities also reiterated its ‘buy’ call, raising the price target to ₹555 from ₹520. Nomura, meanwhile, adjusted Apollo Tyres’ target price to ₹490 from ₹470 but retained a ‘neutral’ rating.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
