Highlights

• Apollo posts better profits than leader MRF in Q3 FY 2025

• JK Tyres faces the worst fall of 75% in net profit 

• Raw material prices look flattish in Q4 and demand robust

The higher raw material prices in the domestic market continued to make a dent in the profit margins of the Indian tire majors in the quarter ending December 2024, but they cushioned the impact to an extent by hiking tire prices. The tire majors made guarded purchases of the raw material rubber from the domestic market while they upped imports, especially of cheaper compound rubber, during the quarter. Still, higher global rubber prices, too, came as a dampener.

The Q3 FY2024-25 (December 2024 Quarter) saw the NR consumption of the tire sector going down by 1.2% to 229,642 tons from 232,349 tons in the same quarter the previous year. However, the import of NR saw a quantum jump to 63,795 tons in October 2024 alone, compared to 39,382 tons in October 2023. 

Titan MRF posted a whopping 40% fall in net profit while Apollo Tyres logged a 32% decline in profit, and JK Tyres had the worst fall of 75% in net profit, whereas CEAT faced a slide of 46.5% in net profit year on year in Q3 FY 2025. 

Revenue of all companies grow except JK Tyres

While MRF’s net profit was INR 508 crore (US$58.88 million) during Q3 FY2024, it fell to INR 306 crore (US$35.47 million) during Q3 FY2025. The revenue from operations for the company, however, rose to INR 6883 crore (US$797.77 million) during FY2025 against INR6047 crore (US$701.00 million) during Q3 FY2024.

Apollo Tyres’ revenue from operations was up 5% to close at INR 6928 crore (US$802.95 million), as against INR 6595 crore (US$764.56 million) in Q3 FY2024. Both Indian and European operations witnessed mid-single-digit growths in revenue in Q3 FY2025. Net profit for Q3 FY2025 closed at Rs 337 crore (US$39.06 million), as against Rs 497 crore (US$57.60 million) in the same period last fiscal.

JK Tyre's consolidated turnover stood at INR 3694 crore (US$428.20 million) in Q3 FY2025, whereas in Q3 FY2024, it was INR 3700 crore (US$428.90 million). The net profit of the company sharply fell from INR 227 crore (US$26.32 million) in Q3FY2024 to INR 57 crore (US$6.61 million) in Q3 FY2025. CEAT’s consolidated revenue closed at INR 3,299 crore (US$382.43 million), an increase of 11.4% Y-o-Y, while its net profit stood at INR 97 crore (US$11.24 million), down from INR 181 crore (U$20.98 million) during the same period a year ago.

Total vehicle sales in India spiked 3.1% in Q3 FY2025 year-on-year compared to 19.5% jump in Q3 2024 year-on-year. This was reflected in the sales and profit of tire majors in Q3 FY2025. The replacement tire segment helped the tire makers to mitigate losses to an extent coupled with price hikes they effected for tires.

Poor truck and bus tire sales impact JK Tyres

While MRF reported a raw material cost escalation from its purchases during the quarter at 23.8%, Apollo had to cough up an 11.7% rise during the quarter, impacting the profits and sales in the replacement segment. For both, price hikes in some tire segments partially undid the damage from muted OEM sales and raw material costs. 

JK Tyre was predominantly hit by weak demand from truck and bus tire buyers, while it reported a 6% rise in raw material costs. Over 50% of JK’s revenue comes from truck and bus tire sales and the percentage in the domestic market comes to over 80%. For CEAT, the raw material costs spurred by nearly 25%, which ate into its margins. The company also faced low demand from OEM customers. It also sustained revenues with sales in the replacement segment and price hikes.

OE demand sluggish, but outlook optimistic

Commenting on the company’s performance, Onkar Kanwar, Chairman of Apollo Tyres Ltd, said that under tough market conditions, Apollo has been able to perform well in the key passenger vehicle and commercial vehicle replacement segments in India. 

“The sluggish OE segment somewhat negated this performance. Europe, too, has performed in line with the market. While the third quarter witnessed an increase in raw material prices, impacting our margins, we see a flattish trend in the current quarter,” Mr Kanwar said.

Reflecting on the results and the outlook of the business, Mr. Arnab Banerjee, MD & CEO, CEAT Limited, said the company witnessed a strong year-on-year double digit growth, driven by the replacement segment. 

“While the rising raw material costs have impacted our margins, we progressively passed on part of the increase through price increases in select categories during the quarter. The demand continues to remain stable, and our order book pipeline is robust across all segments. Raw material prices look flattish in Q4, and we expect growth momentum to continue," Mr Banerjee said.

The capex of the company during the quarter was INR 283 crore, which was fully funded through internal controls and hence, CEAT’s debt level has remained stable.

The quarter saw CEAT announcing the acquisition of Michelin’s Off-Highway Tire business in construction tires and tracks along with the Camso brand in an all-cash deal worth INR 2000 crore (US$225 million). Towards the fag end of the same quarter, JK Tyre could pave the way for securing a $100 million sustainability-linked loan from International Finance Corporation, a member of the World Bank Group, to enhance energy-efficient production at its two plants in India.