Balkrishna Industries Ltd. share price target

Indian OHT exports declined for the third quarter in a row in Q4FY23, from the highs of Q1FY23, as with the easing of container supplies, distributors in target markets started cutting down inventory from elevated ~120 days to targeted levels of ~60 days.

Industry OHT exports remained subdued in Jan’23, closer to Oct’22 lows, post spiking up in the seasonally strong Dec’23. Overall OHT export revenues were down 9% YoY in Jan’23 (up 6% FY23-TD) with the agri tyre segment down 12% YoY vs OTR down 3% YoY.

Post stocking up of off-highway tyre (OHT) inventory at distributor level in end- markets between Mar-Jul’22, India’s OHT exports from Aug’22 were muted as a result of destocking amid improving container availability. OHT exports from the country bottomed out in Oct’22 at ~US$130mn vs Mar-Jul’22 average of ~US$170mn and recovered to a 5-month high of US$152mn in Dec’22.

Balkrishna Industries’ (BIL) Q3FY23 EBITDAM, adjusted for forex losses, came in at ~16%, ~400bps lower QoQ. EBITDAM decline was due to GM decline of ~430bps QoQ on the back of removal of surcharge on ASP of CIF exports by ~6%. This coincided with the usage of higher cost raw material inventory and gradual transition towards falling container contracts.

Quarterly Update Q3FY23

Initiating Coverage Report