Best Tyre Company Stocks to Invest in Dec, 2025

What are Tyre Company Stocks?

Tyre company stocks represent shares of companies involved in the production of tyres, tubes, and other rubber products for various vehicles, including cars, motorcycles, trucks, and agricultural vehicles. These stocks are influenced by multiple factors, such as the growth in vehicle production, increasing demand for replacement tyres, and the rise of specialised tyres in sectors like agriculture and construction. 

The performance of tyre stocks can also be affected by fluctuations in raw material prices, especially rubber and crude oil, as well as changes in economic cycles and government regulations. The Indian tyre sector has seen impressive growth over the past year. In FY2023, the tyre industry as a whole recorded a 9-10% growth in revenue, largely driven by the recovery in vehicle sales and increasing demand for replacement tyres. The sector’s export revenue also saw a rise, with total tyre exports from India increasing by 10-12% in FY2023. 

Why You Should Invest in Tyre Company stocks?

You should invest in Tyre Company stocks for 3 main reasons. The reasons are Affordable Entry Point, Sector Diversification and Economic Sensitivity.

• Affordable Entry Point: Tyre stocks priced below 500 provide an affordable entry for investors, making it easier to buy a larger number of shares with less capital. This affordability allows individual investors to diversify their portfolios without a significant financial burden.
• Sector Diversification: Investing in tyre stocks allows investors to tap into the automotive sector, diversifying their investment portfolios beyond the typical tech or consumer goods sectors. This can protect against volatility in other areas of the market, spreading risk more evenly.
• Economic Sensitivity: When the economy improves, automotive sales generally increase, boosting demand for tyres and positively impacting these stocks. Apollo Tyres experienced a 17% increase in revenue in FY2022, largely due to the resurgence in automotive production and consumer spending following the economic recovery.

The tyre sector also benefits from economic recoveries, as seen with JK Tyre, which reported a 12% growth in revenue in FY2022, and Balkrishna Industries, which saw a 22% increase in FY2023, driven by rising demand. These stocks are closely linked to the automotive industry’s performance, making them an attractive option for investors looking for stable, long-term growth.

What is the Future of Tyre Company Stocks?

The future of tyre company stocks looks promising, with the market expected to reach 192.3 million units by 2026, exhibiting a CAGR of 3.81% from 2021 to 2026. This growth is primarily driven by the expansion of the Indian automotive industry and government initiatives aimed at promoting electric vehicles. As vehicle production increases and demand for replacement tyres rises, tyre companies are likely to see steady growth, making it a favourable sector for long-term investors.

The future of the tyre industry is leaning towards advanced technologies, with innovations such as “Digital Tires” gaining traction. These smart tyres, equipped with sensors, can provide real-time feedback on various parameters like wear, temperature, and road conditions. Despite facing challenges like single-digit revenue growth projections of 7-8% for FY25, tyre manufacturers in India are adapting to technological advancements, ensuring the sector remains dynamic and offers strong potential for continued growth.

What Factors Affect Tyre Company Stock Prices?

There are 4 main factors that affect the Tyre Company’s Stock prices. The factors are Raw Material Prices, Automotive Industry Trends, Export Potential and Government Policies. 

• Raw Material Prices: Leading tyre manufacturers’ profitability is closely tied to the Price of Natural Rubber and Crude Oil Derivatives. Fluctuations in these raw material costs can significantly affect production expenses and profit margins. In FY2024, MRF reported a decline in operating margins due to rising raw material costs, which impacted its overall profitability.
• Automotive Industry Trends: A slowdown in vehicle production and sales can reduce demand for tyres. Apollo Tyres experienced a 4% decline in volume sales in Q4 FY23, primarily due to the slowdown in the automotive sector, which led to reduced vehicle production in India and Europe.
• Export Potential: Global economic conditions and trade policies can impact export revenues. In FY2023, CEAT earned ₹3,000 crore from exports, contributing to 20% of its total revenue.
• Government policies: Government policies, such as import-export duties and environmental regulations, can affect the tyre industry. The increase in import duties on raw materials like natural rubber and carbon black in FY22 led to a 15% rise in production costs, which squeezed profit margins and resulted in a 2.2% decline in net profit for the year.

JK Tyre & Industries experienced a 12% increase in revenue in FY2023, driven by the strong recovery in the commercial vehicle and replacement tyre segments. Balkrishna Industries, a leading player in off-highway tyres, saw a 22% growth in revenue in FY2023, with exports contributing to 60% of its total revenue.

What are the Advantages of Investing in Tyre Company Stocks?

Investing in Tyre Company stocks is advantageous for 3 main reasons. The reasons are High Growth Potential, Steady Demand and Consistent Profits.

• High Growth Potential: Tyre Company stocks often represent companies that have room to grow. As they are priced lower, any positive industry shift or company-specific advancement can lead to significant percentage gains, offering the potential for substantial returns on investment. Balkrishna Industries have saw a remarkable 22% revenue growth in FY2023, driven by growing demand in global markets.
• Steady Demand: Steady demand in the automotive and replacement tyre markets makes investing in tyre companies advantageous. Companies benefit from the ongoing need for replacement tyres as vehicles age, and the automotive sector’s growth drives new tyre demand. Apollo Tyres saw a 9% revenue increase in Q4 FY2023 due to strong demand in both the passenger and commercial vehicle segments.
• Consistent Profits: Consistent profits make investing in tyre companies advantageous as they indicate financial stability and growth, which can result in steady stock price appreciation over time. MRF has consistently posted strong profits, with a 6-7% increase in revenue in FY24, contributing to a rise in its stock price.

With companies consistently posting profits and benefiting from global market trends, investing in tyre stocks offers an opportunity to capitalise on a growing industry. Major Tyre companies have been reporting revenue growth of 7% – 25%, which makes the tyre company stocks an attractive and safe investment option.

What are the Risks of Investing in Tyre Company Stocks?

Investing in Tyre Company stocks is risky for 3 main reasons. The reasons are Volatility Ventures, Economic Exposure and Competitive Pressure.

• Volatility Ventures: Tyre stocks can be highly volatile due to fluctuations in raw material prices, such as rubber and crude oil. In FY2022, the surge in rubber prices by 30% led to increased production costs, impacting margins for companies like CEAT and MRF, causing stock price fluctuations. This volatility makes short-term investments in the sector risky.
• Economic Exposure: The tyre industry is directly linked to the automotive sector, which is highly sensitive to economic cycles. During the COVID-19 slowdown in 2020, tyre sales dropped significantly, leading to a 15% decline in revenue for Apollo Tyres due to reduced vehicle demand. A weak economy can negatively impact tyre demand, affecting stock performance.
• Competitive Pressure: The Indian tyre market is highly competitive, with companies constantly battling for market share. Despite JK Tyre & Industries increasing its revenue by 12% in FY2023, its stock faced pressure due to aggressive pricing strategies from rivals like MRF and Apollo Tyres, which impacted profit margins. Intense competition can limit growth potential and put downward pressure on stock prices.

In FY2022, the prices of natural rubber rose by about 20%, and crude-based inputs such as carbon black and nylon tyre cord surged by 40-50%, leading to increased production expenses and squeezing profit margins across the industry. COVID-19 downturn in 2020, Apollo Tyres experienced a 20% decline in revenue from its Indian operations in Q4 FY20

When Tyre Company Stock Prices Go Up?

Tyre Company stock prices go up mainly due to 3 reasons. The reasons are Rising Tyre prices, Efforts on Premiumisation and Increase in Automotive Sales.

• Rising Tyre Prices: Tyre Companies, along with MRF, have announced price hikes. MRF Tyres had a price hike for truck tyres of 2% and a 3-7% hike for passenger car tyres from July 2024. This ability to pass on costs to consumers is seen positively by investors, as it suggests that companies can maintain profitability despite the rising input costs.
• Efforts on Premiumization: The premiumization strategy adopted by Tyre Companies like MRF, Apollo Tyres and CEAT is also contributing to the rise in their share prices. Premiumization involves offering higher-end, more advanced, and often more expensive products to consumers. 
• Increase in Automotive Sales: Tyre stocks tend to rise when vehicle sales increase, as higher automotive production drives tyre demand. In FY2023, India’s passenger vehicle sales surged by 26.7%, reaching 3.9 million units, which boosted demand for original equipment (OE) tyres. As a result, Apollo Tyres’ stock price rose by 15% in the same period due to strong revenue growth and improved margins.

 India’s passenger vehicle sales surged 26.7% to 3.9 million units, boosting tyre demand and driving Apollo Tyres’ stock up by 15%. Similarly, when global rubber prices fell by 8% in early 2024, MRF Ltd. saw a 12% stock price increase due to improved profit margins.

When Tyre Company Stock Prices Go Down?

Tyre Company stock prices go down mainly due to 3 reasons. The reasons are an Increase in the Price of Rubber and Crude Oil, Intense Competition and Technological Shifts.

• Price of Rubber and Crude Oil: Since tyre manufacturing depends on natural rubber and crude oil derivatives, rising raw material costs can squeeze profit margins, leading to a stock price decline. In FY2022, natural rubber prices surged by 20%, and crude oil prices crossed $100 per barrel, which negatively impacted CEAT Ltd., causing its stock to drop 18% due to higher production costs and reduced profitability.
• Intense Competition: A highly competitive tyre market can lead to aggressive pricing, lower margins, and weaker financial performance. In FY2023, with rising competition from budget tyre brands and Chinese imports, JK Tyre’s market share in the replacement segment dropped, leading to a 9% fall in stock price as investors grew concerned about profitability.
• Technological Shifts: Advances in tyre technology, such as smart tyres and sustainable materials, can make traditional manufacturers struggle if they don’t adapt. In 2024, as global markets shifted toward EV-compatible tyres, companies slow to innovate, like Goodyear India, saw flat revenue growth and a 7% stock decline, as investors favoured competitors investing in advanced tyre solutions.

In FY2022, CEAT Ltd.’s stock fell 18% as natural rubber prices surged 20%, squeezing margins. Similarly, in FY2023, JK Tyre lost 9% of its stock value due to rising competition in the replacement market. As the industry evolves with EV-compatible tyres and smart technology, companies that fail to innovate, like Goodyear India, which saw a 7% decline in 2024, may struggle to maintain investor confidence.