Ceat targets second-largest position in the PCR tyre segment by FY25

Highlighting its medium-term target, the company management outlined its plan to achieve the second position in the PCR tyre space by the end of FY25 and be a market leader over the next 2-3 years.

By Shruti Mishra calendar 14 Jun 2024 Views icon7295 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Ceat targets second-largest position in the PCR tyre segment by FY25

Tyre major Ceat aims to be the number two player in the passenger car radial (PCR) tyre category in the replacement segment over the next two years on the back of better pricing power, the company said in its annual investor meeting. The company maintains its focus on B2C segments to drive growth. 

The Mumbai-based firm, which is one of the largest tyre manufacturers in India by revenue, currently ranks third with a market share of 17%, with Bridgestone and Apollo Tyres being the top two players. The tyremaker believes that tyre players are now more independent in pricing power as compared to earlier periods, and branding will play a key role, which would be the key investment area for Ceat.

Highlighting its medium-term target, the company management outlined its plan to achieve the second position in the PCR tyre space by the end of FY25 and be a market leader over the next 2-3 years. This will be driven by higher focus on marketing, expansion of retail network (currently 580 stores) and dealer support. At present, it commands 8-9% pricing premium over MRF, which has around 12-13% market share.

Ceat is also betting high on premiumization, as it targets a top line of Rs 17,000 crore in three years. As the demand for SUV and MPV vehicles accelerates in the passenger vehicle (PV) market, the need for wider tyres with a large rim size of 18–15 inches has also intensified. The company opined that the rising share of above-17-inch tyres in the PV segment and its focus on this category should aid its margins as well.

"We are focusing on premium tyres to enhance our leadership position. In OEMs, the share of large-diameter tyres has increased to over 50% due to the higher share of SUV tyres. In the replacement segment, the same is at 7–8% at present and has the potential to increase to 25–30% over the next two–three years," the company management said. 

They expect replacement growth to be in double digits, albeit moderate PV OEM volume growth. The company has launched multiple tyres for premium cars, and it now has about 95% SKU (stock keeping unit) coverage for the segment. 

Ceat would not like to have any EV exclusive product range in the future; however, it is targeting this tyre segment with platform-wins in two-wheelers, PV, and commercial vehicle (CV) segments while serving a range of EV manufacturers, including Tata Motors, BYD, M&M, MG Motors, Kia Motors, PSA, etc. in PVs and Tata Motors, Eicher Motors, Olectra, PMI, Mahindra, Switch Mobility, etc. in CVs.

Focus on bite-sized capex

With current capacity, the company expects to touch a turnover of Rs 150,00 crore in the ongoing fiscal. The Ceat management indicated that there is no need for any greenfield capex for the next four years in passenger cars and T&B segments and for the next two years in two-wheelers.

Reiterating its focus on 'bite-sized' capex, Ceat plans to invest Rs 1,000 crore for capacity expansion at its manufacturing units in FY25 and a similar range for FY26.

“The capex incurred during these two years would potentially add Rs 3000-Rs 4000 crore to the company's revenue without any greenfield. Our current capacities are sufficient to meet demand, and most of the growth capex incurred during these years would take care of demand for FY26 and beyond,” they noted. 

Exports expansion

Ceat has picked exports as another growth avenue where it is aggressively targeting entering new international markets. Exports currently contribute close to 19% of the company's revenue, and it aims to take that to 25% by the end of FY26.

It expects growth in the international business to be driven by the Europe, US, Latin America, and Middle East markets, both in bus radials and agri-radial tyres. Ceat has 850 SKUs for agri-exports and plans to add another 100–200 each year.

Presently, the company's PV tyre exports stand at 2.2 million per year, and it plans to launch truck radial tyres in the US by the second quarter of the current fiscal year and passenger radial tyres by the end of FY25.

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