Balkrishna Industries Ltd. share price target

Price increases to pass on cost inflation and logistics cost Motilal Oswal values your support in the Asiamoney Brokers Poll 2021 for India Research, Sales, Corporate Access and...

Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. The company has a ~7% share of the global market. While OTR forms ~65% of the global market, for BIL, it only contributes ~33% to its revenue. The company has been undertaking various 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 cover over 130 countries through distribution network in Americas, Europe, India and Rest of the world. BIL...

Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. The company has a ~7% share of the global market. While OTR forms ~65% of the global market, for BIL, it only contributes ~33% to its revenue. The company has been undertaking various 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 cover over 130 countries through distribution network in Americas, Europe, India and Rest of the world....

Balkrishna Industries (BIL) posted healthy Q4FY21 volume growth of 17% YoY to 68k MT, 15% ahead of our projections.

Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. The company has a ~7% share of the global market. While OTR forms ~65% of the global market, for BIL, it only contributes ~33% to its revenue. The company has been undertaking various 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 cover over 130 countries through distribution network in Americas, Europe, India and Rest of the world....

BIL is just about to conclude a large capex cycle (~| 2,000 crore in FY1921E) and has announced a fresh capex programme amounting to another | 1,900 crore in the next 18-24 months. It comprises (i) brownfield tyre expansion for | 800 crore by H2FY23E (adds 50,000 MT per annum capacity to take total capacity to 3.35 lakh MT pa; ~four-year payback period), (ii) carbon black expansion for | 650 crore by H1FY23E (takes capacity to 2 lakh MT pa from present 1.15 lakh MT pa; includes 30,000 MT pa for advanced carbon material; ~five to six year payback period) and (iii) modernisation capex of | 450 crore by H1FY23E; ~five-year payback period. Expanded...

Domestic auto industry volumes have been on a steady mend in the months post lifting of lockdown restrictions. Manufacturing and distribution activities have been getting ramped up gradually since June 2020, in step with the rest of the economy. However, the impact of the pandemic on the supply chain continues to inhibit a complete return to production normalcy. Nevertheless, most automotive industry segments have reported successive improvement in offtake throughout June-November 2020 (Exhibit 1) on the back of (i) initial bounce provided by pent-up aspect,...

Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. The company has a ~7% share of the global market. While OTR forms ~65% of the global market, for BIL, it only contributes ~33% to its revenue. The company has been undertaking various 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 cover over 130 countries through distribution network in Americas, Europe, India and Rest of the world....

For BIL, sales, PAT are seen growing at 11%, 12% CAGR, respectively, in FY20-23E. BIL continues to broadly deliver on stated growth and margin guidance. BIL's net debt free B/S, double-digit return ratios and strong cash generation provides us margin of safety. As a result, we continue to hold a positive view on the stock and retain our BUY rating with a revised target...

Balkrishna Industries (BIL) posted strong volume growth of 36% YoY to 61.2k MT in Q2FY21, ahead of our projections.