Global research firm believes that the Indian tyre industry is witnessing a phase of cyclical uptick in demand.
The industry fundamentals are in a better shape now due to the demand and high utilization as well, analysts at the firm wrote in their report.
It sees 8 percent volume CAGR over FY18-21.
The segment is a good play on the back of healthy growth outlook, pricing discipline, and benign commodity prices, which will support margins.
Further, the benign commodity prices could also lead to 20-25% EBITDA CAGR over FY18-21.
Nomura expects strong demand scenario to keep utilization healthy.
Among stocks, it has initiated coverage on Apollo Tyres with a target at Rs 288, along with Ceat and Balkrishna Industries.
On Ceat, it neutral with a target at Rs 1,346. In case of Balkrishna Industries, it is also neutral with a target at Rs 1,008.