tyre manufacturers may contract in the next two quarters due to sustained increase in prices of rubber and limited capacity of the companies to pass on the entire increase in cost to customers due to the economic slowdown triggered by the covid-19 pandemic, said credit ratings firm Care Ratings.
Raw material cost for the domestic tyre industry increased by 49.6% on a sequential basis in Q4FY21. The industry's average Ebitda margin in the quarter stood at 16.3%, which was down from 19.86% in Q3FY21 but better than 14.9% in Q4FY20. “CARE Ratings believes with current global supply shortage against demand, rubber prices are further expected to increase by 10-12% in FY22.