Balkrishna Industries Ltd. share price target

Balkrishna Industries Ltd (BIL) recorded sales volume of 199,213 MT during FY18, exceeding the guidance of 195,000 MT driven by higher traction in the agriculture and mining segment. Most of the demand came from the European region which grew at 20% YoY followed by India at 15%. The management has indicated 220,000 MT for FY19 on the back of growing demand from the off- highway industry.

Q3 EBITDA (adjusting for realized forex gains and one-off expenses) was marginally below estimate on higher employee costs & other expenses. Company maintained FY18 volume guidance of 190-195k tonne, implying a growth of 11-13%, on recovery across segments (especially in the US).

Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. A low ~5% share of the global market makes us believe reasonable room exists for several years of growth. While OTR forms ~65% of the global market, for BIL, it only contributes ~33% to its revenue. With the completion of the new 140,000 MT facility at Bhuj, BIL is looking to expand in the OEM, OTR segments. The company has been undertaking vari ous actions like setting up warehouses in markets in North America and Europe to be closer to the customer and have a just in time (JIT) system. The company sales to over 130 countries through Distribution network...

ICICI Securities Ltd | Retail Equity Research Balkrishna Industries' (BIL) revenues were at | 1106 crore (up 25.4% YoY) vs. our estimate of | 1,087 crore. This was mainly after volumes grew 22.6% YoY to 49,553 metric tonnes (MT) EBITDA margins were at 26.2% (down 530 bps YoY, 115 bps QoQ) below our estimate of 28.7%. On a QoQ basis, raw material cost declined thereby expanding the gross margin (up 356 bps QoQ). However, the same was offset by higher employee & other expense...

ICICI Securities Ltd | Retail Equity Research Balkrishna Industries (BIL) is an export dominated niche play. The company is well placed to capture the demand revival opportunity. BIL largely has everything in place: 1) It enjoys labour arbitrage, 2) has ample capacity to cater to the rising demand, 3) has highest margins compared to its peers that are expected to sustain and 4) strong financials (healthy return ratio >18% and FCF yield of >5%). However, we believe the positives are largely reflected in the share price, which is up 124% in the...

Volume grew by impressive 16% YoY led by strong growth in US, Europe and ROW markets coupled with strong demand in agriculture and mining tires. Realization/ton also increased by ~6% YoY led by favourable product mix and currency hedges (Euro realization at Rs. 80 as against Rs. 75-76 for FY17). Hence, reported revenue surged by 22.5% YoY. Given strong demand outlook across geographies the management has increased its volume guidance to 190,000 to 195,000 tons from 185,000 to 190,000 tons. We expect volume CAGR of 14.5% over FY17-20E as demand continues to be buoyant across segments (especially the OTR space) and the company continues to make in-roads with various OEM's....

Balkrishna's (BKT) Q2FY18 adj. EBITDA was 11% ahead of estimate driven by better tonnage and operating leverage benefits.

We maintain NEUTRAL, with an upgraded TP of Rs 1,857 (rolled forward to 16x Sep-19E EPS vs 14x earlier), given that margin expansion will accrue from oplev benefits and backward integration. Balkrishna Industries (BIL) revenue at Rs 11bn (+22% YoY) was in-line with expectations, largely led by 15% volume growth and 4% growth in net ASPs. EBITDA margin (21.3%) came in lower, owing to higher prices of natural rubber.

Balkrishna Industries' (BIL) revenues came in at | 1,114 crore (up 19.5% YoY) vs. our estimate of | 1,023 crore. This was mainly after volumes grew 15.9% YoY to 49,331 metric tonnes (MT) (above our expectation of 47,231 MT for the quarter) EBITDA margins came in at 27.4% (down 562 bps YoY; however up 601 bps QoQ), below our estimate of 28.6%. On a QoQ basis, all the cost parameters declined - Raw material cost declined thereby expanding the gross margin (up 247bps QoQ) while employee &...

Q1FY18 adj. EBITDA was 7% below estimate owing to lower-than-expected gross margin. This was largely due to high-cost raw material inventory impacting margin while price hike (~5%) announced was not implemented fully.