JK Tyre profits slump as raw material costs surge

JK Tyre & Industries reported a 2% year-on-year rise in consolidated revenue to INR39.56 billion (€360 million) in Q1 FY2027, but earnings before interest, taxes, depreciation, and amortization (EBITDA) plunged 36.8% to INR2.68 billion. The company cited strong demand across all segments in India, with domestic tire volumes up 25% year-on-year, driven by a 42% surge in original equipment (OE) sales. Truck and bus radial (TBR) volumes climbed 18% in the OE market and 15% in replacement, while passenger car tire volumes rose 10%, led by OE demand. Farm tire volumes jumped 31%, with OE up 35% and replacement up 25%. Two- and three-wheeler OE volumes increased 17%, with replacement volumes up 48%. Managing director Anshuman Singhania attributed the earnings drop to a 20% quarter-on-quarter spike in raw material costs, exacerbated by the West Asia crisis, which eroded gross and operating margins despite higher selling prices and product mix improvements. Singhania noted that recent moderation in commodity and crude oil prices should ease input costs and improve margins going forward. Installed capacity in India was fully utilized across TBR, passenger car radial (PCR), and two- and three-wheeler segments during the quarter. Export volumes from India remained stable, rising 2% sequentially compared to Q4 FY2026. Singhania highlighted record performance across the Indian automotive industry, with overall car retail sales up more than 15% year-on-year, according to Federation of Automobile Dealers Association (FADA) data. Over the medium term, JK Tyre expects tire demand to stay resilient due to new vehicle launches, a robust replacement market, rapid infrastructure growth, and a rising vehicle park. Rural demand is also strengthening, driven by rising incomes, better infrastructure, and growing aspirations for quality products, prompting the company to expand its rural distribution network. In Mexico, JK Tornel operations faced disruptions from geopolitical issues, constraining key input availability, and industrial relations challenges during productivity negotiations, though these have since been resolved. The company is upgrading and modernizing its Mexican operations to boost competitiveness in local and export markets. JK Tyre remains committed to expanding manufacturing capacity in India, with a previously announced INR49.8 billion investment program for passenger car and truck and bus tires at its Chennai plant. The company expressed optimism that automotive and tire demand momentum will remain strong in the medium term.