JK Tyre & Industries Ltd. share price target

JK Tyre's revenue grew during the quarter driven by its India operations, while the Mexico business partially offset this growth due to geopolitical tensions. Margin and profitability were impacted as the cost of sales increased. The Indian tyre industry is expected to grow 7-8% this fiscal driven by strong domestic replacement demand. Furthermore, the company's market penetration, digitalisation efforts and focus on enhancing operational efficiencies are expected to support long-term growth. Nevertheless, global uncertainties caused by US tariffs and the ongoing geopolitical situation continue to pose challenges. As a result, we retain our HOLD rating on the...

JKI’s Q3FY25 performance was significantly impacted by high-cost inventory (major hit in Q3; guided to partial reversal in Q4) along with subdued demand from CV OEMs; this resulted in a largely flattish consolidated revenue performance.

JK Tyre (JKI) Q2 results were soft, impacted by ~16% sales decline in Mexico on weak Latin American demand and 10% currency depreciation vs INR.

With new product launches, better quality and brand equity improvement, the company has witnessed better pricing and margins over the past three years. Its consolidated EBITDA margins improved from pre-Covid 10.7% in FY19 to current 12.3% in Q1FY24.

We visited the Chennai plant of JK Tyre & Industries (JKI) and met the management for an insight on the company’s business strategy/outlook. Key takeaways: 1) The Chennai plant with a current capacity of 330tpd can produce 4.85mn/1.2mn PCR/TBR per annum respectively with cumulative capex of ~Rs25bn having been being done on this facility.

We expect strong demand from the domestic as well as international market, however input cost inflation remain key risk to the business. Hence, we remain cautious on the stock and maintain our HOLD rating with a rolled forward target price of Rs. 139 based on 6x FY24E adj. EPS. Revenue crossed Rs. 3000cr mark for the first time The company recorded its highest ever revenue of Rs. 3,076cr with year-on-year growth of 11.1% (+3.0% QoQ) on the back of all the market segments performing well. The company also recorded highest ever export of Rs. 484cr during the quarter, taking...

...