Demand, margin worries: A rough terrain for tyre firms till mid-FY23

The extent of the raw material risk is more for tyres as compared to others given the dependence on the crude oil derivatives.

The tyre sector has been one of the most-impacted segments within the auto-component space because of the surge in commodity prices. Stocks in the sector have seen the sharpest earnings per share cuts and de-rating. Leading tyre sector players have shed between 17 per cent and 30 per cent since their highs in January, before recovering a bit over the last couple of weeks. 

Highlighting the earnings sensitivity of the raw materials cost surge across sectors, analysts led by GV Giri of IIFL Research place tyre companies at the top of the list of companies that face the highest emerging risk.