Tyre industry accounts for 3% of India’s manufacturing GDP and forms an important part of an economy. In the following article, we have tried to showcase the basic financials and ratios of global tyre companies and compared it with Indian tyre companies. We have tried to take tyre companies from different geographies, and compared their 3 year financials.
Key point to remember for the below analysis is –
- Mentioned year is financial year for respective companies.
- For simplicity of comparison, all financials have been converted into USD millions.
We have covered 6 international tyre companies and 6 Indian tyre companies.
Tyre Industry – Gross Margin
Indian tyre companies have been generating better Gross Margins compared to their global tyre companies. Recent hike in crude and rubber prices have lead to decrease in the gross margins.
Tyre Industry – Asset Turnover
Indian tyre industry’s asset turnovers are higher than the global tyre companies. None of the global tyre company is generating asset turnover above 1.0x.
Tyre Industry – Return on Assets
Indian tyre companies generated double Return on Assets in FY 2016 (~12%) compared to their global tyre companies, however recent hike in raw material prices have lead to decrease in the returns.
Tyre Industry – PAT Margin
Indian Tyre companies are generating better PAT margins compared to global tyre companies.
Goodyear Tire – Global v/s Indian Company
Comparison of Goodyear Tire global and Goodyear India shows that same company is generating better returns in India.
Tyre Industry – Cash Flow Generation
Tyre industry generates healthy cash flows irrespective of the geography.
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