Apollo Tyres Ltd expects double-digit revenue growth in FY24, purely on the performance of organic volume growth, according to company President, Asia-Pacific, Middle East and Africa, Satish Sharma.
The Indian tyre industry is in a sweet spot with strong demand coming in while raw material prices are moderating, he said although reducing tyre prices would depend on competitive intensity.
“We are still in the same vicinity of double-digit growth. It is definitely on the cards,” Sharma said in an interaction here. He was responding to a query on the revenue growth outlook for FY24.
In 2022-23, Apollo Tyres clocked a consolidated revenue from operations of Rs 24,568 crore as against Rs 20,948 crore in 2021-22.
With the base effect and impact of the COVID-19 pandemic “all gone”, Sharma said, “Going forward, it’s all volume (growth), there is nothing that will come out of value (due to price hikes) except for a mix enrichment, which is a continuous process.”
For the tyre industry also, he said, FY24 will be pure performance for everyone based on volume growth and the organic growth in the economy.
“India is in a very good spot…Every macro is pointing out it’s India’s time,” Sharma said adding despite the current global geopolitics issues, if “nothing else in the world really goes dramatically wrong”, inflation will get moderated more and more which would only lead to a better demand scenario for India.
While the commercial vehicles segment, from an OEM perspective, is in an upcycle that is “likely to be a longish cycle”, on the passenger cars category it is going to do much better than the previous decade track record of low single-digit growth and move to a high single-digit, he added.
When asked about the possibility of tyre price reduction with the raw material cost coming down, Sharma said,”…given the uncertainties in the environment and given that inflation is still not moderated, the scenario of price reductions to my mind looks remote but finally, they’re always governed by competitive intensity.
Going forward, he said Apollo Tyres would continue to focus on “technology-driven” premium positioning of its products across categories.
The company’s Vredestein brand is winning original equipment business for luxury models, while in the two-wheeler category Apollo Tyres has also bagged some business from Royal Enfield and KTM for supplies of radial tyres, he said adding the radialisation strategy is also followed in the light truck segment, where the company has 80% share.