Balkrishna Industries Ltd. share price target

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...

Sales, EBITDA and PAT are seen growing at 14.6%, 19.4% & 12.9% CAGR, respectively, over FY20E-22E. Sustainability and quantum of recent uptick in OHT export volumes is a key monitorable for BIL, going forward. In our view, the CMP factors in most positives, leading us to maintain HOLD rating with a revised target price of | 1275, valuing BIL at 20x FY22E EPS of | 63.6. BIL is trading at substantial premium valuations compared to its peers, courtesy...

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 to over 130...

BIL delivered healthy 12.5% CAGR volume growth in FY16-19P. Total tonnage increased from 1.5 lakh MT to 2.1 lakh MT during that time, driving BIL's emergence as a dominant player in the niche off-highway tyre space. With exports forming ~82% of revenues (India presence established meaningfully just three years back), BIL's fortunes remain tied majorly to demand conditions in the key markets of the Americas and Europe. During H2FY19, demand in the agri segment, in particular, was adversely impacted by a combination of trade war-led souring of sentiment, production cut at a...

BKT has developed into a global player in the Off-Highway tire industry with a 6% market share and a sales volume of 850 Million US dollars corresponding to a 30% increase over the last 5 years. BKT have 4 subsidiaries in Europe and North America assisting our head office in sales and marketing activities....

Weak Agri Demand in Europe Continues to Impact Volume: Balkrishna reported sales volume of 46780 MT for Q3FY19 which came below our estimate of 48000 MT

Balkrishna Industries (BIL) posted muted Q3FY19 results Revenues came in at | 1,206 crore (up 9.0% YoY, down 9.0% QoQ). The company disappointed on the volume front (46,780 tonne; down 5.6% YoY). However, it said ASPs were up 9.0% YoY EBITDA inched up 3.8% YoY to | 301 crore, with margins at 25.0% (down 125 bps YoY & 14 bps QoQ). This was mainly due to higher...

Global growth concerns persisted with disappointing PMI data, muted business spending in US, uncertainty over Brexit and US-China trade deal. Both BoE and European Commission raised concerns over growth. As a result, global yields closed lower. On the domestic front, RBI surprised positively with a rate cut (4-2 vote) and unanimous decision to change its stance to neutral from...

Balkrishna Industries (BIL) numbers were below estimates on all fronts. Volume hit in the quarter was mainly due to Europe and is expected to recover from the ongoing quarter. Operating performance was further impact due to increased branding expenditure to the tune of ` 160 mn....

Weak Agri Demand in Europe Impacts Revenue Estimate: Balkrishna reported sales volume of 52339 MT for Q2FY19 which came below ourestimate of 56000 MT.