JK Tyres’ (JKTIL) consolidated revenues grew 0.2% YoY to | 1781 crore (vs. our estimate of | 1,759 crore). Revenues from domestic operations (India) declined 1.5% YoY to | 1,479 crore (volume growth of ~11% YoY; offset by ~13% decline in price) while revenues from Tornel were up 9.8% YoY to | 302 crore . EBITDA margins expanded 332 bps YoY & 463 bps QoQ to 20% vs. our estimate of 15%. Lower input cost was mainly due to an increase in inventory during Q1FY17 thereby expanding its gross margin.

Valuation: ICICI Securities Limited value JKTIL at 4x FY18E EV/EBITDA to arrive at a target price of | 110 (earlier | 90) with a HOLD recommendation on the stock. Any positive step by the government in terms of restricting Chinese tyres will be the key upside risk.