JK Tyre earnings hit by higher input costs

New Delhi – JK Tyre & Industries has reported a 2% year-on-year increase in consolidated revenue to INR39.56 billion (€360 million) in the first quarter of fiscal year 2027, started 1 April, while earnings (EBITDA) fell 36.8% to INR2.68 billion.

The quarter was supported by “strong demand momentum across segments”, with domestic sales volumes increasing 25% year-on-year across the replacement and original equipment (OE) markets, said JK Tyre in a 10 Aug earnings call.

However, profitability was affected by higher input costs, with average raw material costs increasing 20% from the previous quarter.

“The continuing West Asia crisis led to a steep increase in raw material prices by approximately 20% versus fourth quarter of FY26, which impacted our gross and operating margins,” explained managing director Anshuman Singhania.

The headwinds offset the gains made through higher selling prices, enhancement of product mix and efficiency improvement measures, Singhania added.

The company leader added that recent moderation in commodity and crude oil prices “are expected to lower input costs and improve profitability margins going forward.”

Over the three month-period to end of June, domestic tire volumes in India increased 25% year-on-year in the first quarter, with OE volumes leading growth at 42%.

TBR volumes increased 18% in the OE market and 15% in the replacement market.

Passenger tire volumes rose 10%, led by the OE segment, while farm tire volumes increased 31%, helped by a 35% growth in OE and 25% increase in replacement.

In the two- and three-wheeler segment, OE volumes increased 17%, while replacement volumes rose 48%.

Commenting on operations, Singhania said installed capacity in India was “fully utilised across segments including TBR, PCR, two- and three-wheelers” during the quarter.

Export volumes from India remained steady despite geopolitical uncertainty and were 2% higher sequentially than in the final quarter of the previous fiscal year.

On the market outlook, the JK Tyre leader said the Indian automotive industry posted “another consecutive quarter of record performance across all segments.”

Citing data from the Federation of Automobile Dealers Association (FADA), Singhania said overall car retail sales rose more than 15% year-on-year during the quarter.

Over the medium term, JK Tyre said it expects tire demand to ‘remain resilient’ supported by “new [automotive] launches, strong replacement market needs, rapid infrastructure growth, and a rising vehicle park.”

Singhania also pointed to increasing demand from rural markets, which it said was being driven by “rising incomes, improving infrastructure, and growing aspiration for quality products”.

The company is consequently expanding its rural distribution network.

Elsewhere, Singhania said group operations at JK Tornel in Mexico were affected during the quarter “due to ongoing geopolitical disruptions, resulting in constrained availability of key inputs.”

The business also experienced industrial relations issues during negotiations on productivity improvements, although these have since been resolved, according to the company leader.

JK Tyre said it is undertaking an “upgradation & modernisation project” at the Mexican operation to strengthen its competitiveness in local and export markets.

Overall, the Indian group expects the Mexican tire market to see “balanced growth,” supported by momentum in the OE market, a resilient replacement market and higher export potential, with a focus on local sourcing.

JK Tyre said it remains committed to expanding manufacturing capacity in India, with the previously announced INR49.8 billion investment programme for passenger car and truck and bus tires at its Chennai plant.

Looking ahead, JK Tyre said it remained “optimistic that the demand momentum for automobiles and tires would remain intact” in the medium term.