MRF warns of tough FY27 for tyre industry amid rising costs and global uncertainty

MRF, a leading tyre manufacturer, forecasts a difficult FY27 for the domestic tyre sector. The company cites geopolitical tensions, rising input costs, and the risk of a poor monsoon as key factors that could reduce demand and profitability.

Key Highlights

• MRF forecasts a tough FY27 for the tyre industry due to rising costs and geopolitical risks.
• The domestic tyre sector grew by nearly 10 percent in FY26 with exports up by 9%.
• Export revenue reached Rs 2,324 crore in FY26 despite disruptions in key markets.
• MRF plans to expand its international presence with new truck and agricultural radial products.

Key Economic and Industry Challenges

The Indian government projects economic growth of 7 to 7.4 percent for FY27. However, MRF notes that the ongoing West Asia conflict has created uncertainty. The company warns that higher energy prices, supply chain disruptions, increased logistics costs, and larger subsidies may raise inflation and affect fiscal balances. These factors could dampen domestic demand, according to MRF's latest annual report.

MRF, with revenues of Rs 31,140 crore, also highlights the impact of a below-normal monsoon. Poor rainfall could hurt agricultural activities and rural demand, which are crucial for the farm and two-wheeler tyre segments. Despite these challenges, MRF believes India's strong macroeconomic fundamentals will help the country manage these risks.

Profitability and Export Trends

MRF expects profitability to decline in FY27, as commodity prices have increased after a period of decline last year. In FY26, the domestic tyre industry grew by nearly 10 percent, while tyre exports from India rose by 9 percent, supporting overall profits. However, current high material costs are expected to put pressure on margins in the coming fiscal year.

On the export side, MRF anticipates a recovery after a year of consolidation. Export revenue increased slightly in FY26, reaching Rs 2,324 crore, up from Rs 2,307 crore in FY25. The first half of FY26 saw strong double-digit export growth, but the second half experienced a slowdown due to geopolitical disruptions.

MRF identifies several factors affecting exports. Economic downturn in the Philippines, political changes in Bangladesh, election-related uncertainty in some African countries, and the Iran crisis have all impacted demand and supply chains. West Asia, a core export market for MRF, faced particular challenges.

Strategic Initiatives and Brand Recognition

The company states that the industry is navigating rising raw material prices and higher freight rates caused by global crises. Looking ahead, MRF plans to expand its presence in Europe and the Americas through new truck radial and agricultural radial products. The company also aims to strengthen its position in Africa, Southeast Asia, and Europe.

According to the Brand Finance India 100 – 2026 report, MRF is recognised as India's Most Valuable and Strongest Tyre Brand. It is also ranked as the World's third-strongest tyre brand and is among the Top 50 Most Valuable Brands in India across all sectors.

Outlook for FY27

MRF expects FY27 to be challenging for the tyre industry, with rising raw material costs, geopolitical uncertainties, higher freight rates, and the risk of a weak monsoon all likely to impact demand and profitability. While the company anticipates a recovery in exports and support from new product launches, it remains cautious about near-term market conditions.

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