However, the hike is estimated to be 1-2% as per the ‘market dynamics’, stated Anshuman Singhania, MD, JK Tyre. “Total raw material prices have increased on a cost per quarter basis, i.e 6 to 7%. We've been able to pass on 1 to 2% in the market and expect another price increase in quarter three at a level of 1 to 2%,” added Singhania during the post earnings call.
JK Tyre reported revenue of INR 3,643 crore and EBITDA of INR 443 crore in Q3 FY25. The EBITDA margin for the quarter stood at 12.2%.
Cost control measures as per market dynamics
India’s tyre industry this fiscal year has observed a drastic increase in raw material prices, due to which major industry players are opting for cost hikes to attain business stability. “We have been able to raise prices by only about 3.5-4%, while the raw material prices have gone up to 12-13%. The impact of which is about 8-9%. The price hike will be done after assessing the market dynamics to reduce the inflammation, stated Singhania.
However, last month (October) prices for natural rubber were reduced due to which high prices subject to maybe minor variations, may get stabilised soon, said the top company official. “In October, there was a reduction in natural rubber prices. But the commodity has remained quite volatile in the last few quarters. The impact of reduction will be known once the price stabilises,” stated Sanjeev Aggarwal, Chief Financial Officer, JK Tyre.
Singhania has also emphasised upcoming demands from the two and three-wheeler market, replacement market, and the forthcoming challenges.
Upcoming demand across sectors
The company expects a good demand from two-wheeler and three-wheeler manufacturers due to record sales in the festive season, stated the management. “We see that 2-3 wheeler growth should continue into the second half also.”
The management also possesses a positive outlook toward the recovery in the commercial vehicle and passenger vehicle segment after muted monsoon sales.
The replacement market of tyre industry which contributes significantly to the industry is also expected to bring double-digit growth in Q3, added Aggarwal.
The commercial vehicle industry which recorded muted sales in the last quarter has been a concern for the company. However, they are optimistic that the momentum will rise again.
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