Rubber price rise, demand woes could lead to derating of tyre companies

Demand trends could remain muted in the near term, given weak passenger vehicle replacement demand

The margins of tyre manufacturers could come under pressure given the rise in rubber prices and the moderating demand for tyres.

In the past three quarters, the revenue growth for listed tyre companies has moderated from low to mid-single-digit on account of factors such as lower demand in replacement segments, weak export markets and the decline in the average selling prices to car makers (OEMs).

Demand trends could remain muted in the near term, given the weak passenger vehicle replacement demand, assuming a typical replacement cycle of 3-5 years, and demand moderation in the OEM segment.

Further, the sluggish demand