Balkrishna Industries tanks over 11% as Q3 profit plunges 68% YoY

Shares of Balkrishna Industries plunged 11.5 per cent to Rs 2041 per share on the BSE in Monday's intra-day trade after the tyre firm's consolidated net profit for the October-December quarter (Q3FY23) plummted 68 per cent year-on-year (YoY) to Rs108.38 crore from Rs 339 crore clocked in the corresponding period last year. In comparison, the benchmark S&P BSE Sensex was down 0.5 per cent at 10:35 AM.

Its revenue from operations increased marginally by around 6 per cent to Rs 2,165.57 crore in Q3 as against Rs 2,045.81 crore reported during the quarter ended December 2021.

Ebitda (earnings before interest, tax, depreciation, and amortisation) stood at Rs 314.26 crore, sliding 44.84 per cent from Rs 569.69 crore in December 2021. EPS declined to Rs 5.61 in the quarter udner review from Rs 17.53 a year-ago.

"The end demand is still holding up, but the channel issues of ordering continue to impact the volumes. As expected, Q3 volumes were 66,480 MT. The company continues to face challenges of de-stocking in Q4, however the intensity of the situation is receding on month-on-month basis," the management said in its statement.

Over the past one month, shares of Balkrishna Industries have advanced 3 per cent as against less than 1 per cent rise in the benchmark S&P BSE Sensex. 

Balkrishna Industries is one of the world's leading manufacturers of Off-Highway Tyres (OHT). BKT has the widest product range with more than 3,200 Stock Keeping Units (SKUs) and acts like a "One

Stop Shop" for all the OHT solutions. The company has a global market of 6 per cent in the OHT segment, with 69 per cent of revenue coming from replacement demand.

"We initiate coverage on Balkrishna Industries Limited with a BUY rating and a target of Rs 2,499 (30x FY24e EPS). BKT's majority of revenue comes from replacement demand. With an increase in focus on larger radial tyres (higher margin product) and Off-The-Road Tyre market (shorter replacement cycle), we believe that BKT is bound to do well and able to reach its 10 per cent market share mark in OHT industry," said analysts at Keynote Securities in a recent report.