A steep rise in raw material prices has impacted tyre makers’ earnings in the July-September quarter, prompting analysts to suggest that companies may opt for further price hikes in the coming months. A siginificant drope in profit was seen across the industry in the quarter under review. For instance, India’s largest tyre maker, MRF, reported a drop in consolidated net profit, from Rs 527 crore in Q2 FY26 to Rs 387 crore in Q2 FY27, due to high input costs. JK Tyre witnessed a 71% fall in profit to Rs 65 crore as the company saw a 38% year-on-year increase in raw material costs in Q2 FY27.
Industry leaders say raw material costs have gone up significantly in the last six months.
Anshuman Singhania, MD of JK Tyre, said in a recent media interaction that raw material prices had increased by around 30% in the past six months, and the company expects a further rise of 4.5% by the third quarter of FY27. Singhania also said that the company would raise tyre prices by another 3-4% in the current quarter, following a cumulative increase of nearly 11% over the past six months.
Similarly, Apollo Tyres witnessed a sharp increase in raw material costs, which stood at Rs 4,241.42 crore in Q2 FY27. Its profit fell to Rs 292.28 crore on a quarter-on-quarter basis, although it registered a modest 13% year-on-year increase from Rs 258 crore.
“Profitability remained affected by the sharp escalation in raw material cost. Since April 2026, raw material costs have increased by approximately 25%, making this one of the steepest and fastest cost inflation episodes we have experienced in many years,” said Ravi Kumar Shingari, CFO of Apollo Tyres, during an analyst call.
Shingari said Apollo Tyres had implemented a price increase of 15% in the replacement segment and a “meaningful price rise” in the OEM business segment.
CEAT also witnessed a sharp fall in consolidated net profit, from Rs 186 crore in Q2 FY26 to Rs 112 crore in Q2 FY27. The company's raw material costs increased to Rs 3,234 crore from Rs 2,319 crore in the corresponding quarter of the previous year.
“However, Q1 also saw a sharp escalation in input costs driven by natural rubber prices, both international and local, and also prices of crude-linked derivatives. Raw material cost increase was about 15% to 16% vis-a-vis the average of last quarter,” said Arnab Banerjee, MD and CEO of CEAT.
“We have raised tyre prices progressively over the last six to seven months, but these increases have not fully compensated for the rise in raw material costs. We therefore plan further price actions this quarter, in a calibrated manner. Costs remain elevated because of the conflict in West Asia,” said Kumar Subbiah, CFO of CEAT.
However, Subbiah expects input costs to normalise in the future following the announcement of an end to the US-Iran war.
“A durable end to it would ease supply chains and crude-linked input costs, but the benefit takes time to flow through inventory cycles. We expect normalisation to be gradual rather than immediate, and will keep focusing on mix improvement and cost control,” Subbiah added.
K Srikumar, senior vice-president and co-group head at ratings firm ICRA Ltd, said, “Although tyre makers have implemented calibrated price hikes over the last two quarters, the input cost inflation has not yet been fully passed on, resulting in contraction of margins. ICRA expects the industry’s operating margins to remain under pressure in FY2027 due to elevated input costs. Going forward, stabilisation in crude oil prices will be a key monitorable for the stability of the industry’s margins.”