Tyre stocks in focus: Apollo, Balkrishna, Ceat rally up to 5%; here's why

Tyre stocks outlook: After a weak performance in FY25 - largely due to a sharp rise in input costs; analysts expect margins to gradually revive, aided by softening costs and focus on premiumization.

Tyre companies share price 

 

Shares of tyre companies Apollo Tyres, Balkrishna Industries, Ceat, MRF, JK Tyre & Industries and TVS Srichakra rallied up to 5 per cent on the BSE in Wednesday’s intra-day trade in an otherwise range-bound market on expectations of the demand momentum to pick up going forward. At 09:40 AM; the BSE Sensex was up 0.06 per cent at 83,751.

 

However, in the past one month, Apollo Tyres, JK Tyres and Ceat underperformed the market by declining in the range of 1 to 3 per cent, as compared to a 3 per cent rise in the benchmark index.  FOLLWO STOCK MARKET LATEST UPDATES LIVE 

Automobiles June month sales, outlook

 

June 2025 wholesale volumes reflected divergent trends across segments. The passenger vehicle (PV) segment recorded a low-single-digit year-on-year (YoY) decline, weighed down by subdued domestic demand, partially offset by double-digit YoY export growth. 2W and tractors reported double-digit YoY growth, while commercial vehicle (CV) volumes declined by 3 per cent YoY.

 

The tractor segment posted double-digit YoY growth, driven by expectations of above-normal monsoon, although raw material inflation and price hikes may impact sentiment.

 

Looking ahead, domestic PV wholesales are expected to remain weak in the near term. Analysts at JM Financial Institutional Equities do not anticipate any meaningful recovery in PV demand until the festive season. In 2Ws, recent Reserve Bank of India (RBI) rate cuts and improving rural sentiment should offer near-term support. CV volumes may stay muted over the next one to two months due to stalled construction in the monsoon but are expected to gradually recover, led by higher Government of India capex and improved infrastructure activity.

 

With recovery in export volumes, 2-W industry is well poised to record high single digit volume growth in FY26E, thereby handsomely outperforming other vehicle categories. It is also expected to benefit from rationalisation of personal income tax regime for FY26E with industry players projecting a volume growth of ~6-8 per cent in FY26E, said ICICI Securities in a note.  ALSO READ | Nomura maintains FY26 auto growth forecasts despite June wholesale miss 

The tractor industry has been witnessing good momentum on account of above normal monsoon 2025, good reservoir levels, strong Rabi outlook and positive terms of trade for farmers. Consequently, the brokerage firm expects tractor industry to report healthy growth in consequent months as well. 

 

Further, ICICI Securities expects CV prints to improve going forward amidst expectation of pick up in government capex. Going forward the PV segment is expected to grow modestly by single digit in FY26.

 

Meanwhile, after a weak performance in FY25, which was largely impacted by a sharp rise in input costs, analysts expect margins to gradually revive, aided by softening costs and its focus on premiumization.

 

On input costs, while they are expected to decline in the coming quarters, Apollo Tyres management expects the raw material basket to remain stable QoQ in Q1FY26. From Q2 onward, benefits of a reduction in crude-led derivatives are likely to reflect in financials. However, management believes that prices of natural rubber may not come down soon as we will shortly enter the lean period for rubber (rainy season), Motilal Oswal Financial Services said in the Q4 result update.