JK Tyre & Industries Ltd. share price target

JK Tyre (JKI) has delivered a muted operating performance in 3QFY20 with its consolidated EBIDTA margin contracting by 265bps QoQ (+139bps YoY) to 11.1%. Its consolidated revenue declined by 19%YoY (+2% QoQ) to Rs22bn (vs. our estimate of Rs22.97bn), while EBIDTA fell 8% YoY and 18% QoQ to Rs2.4bn (vs. our estimate of Rs2.9bn). However, EBIT margin of Maxico business contracted 1223bps YoY and 431bps QoQ to 0.7%. Reported PAT came in at Rs110mn, While adjusted PAT, excluding extraordinary gain, declined significantly by 73% YoY and 95% QoQ to Rs104mn, vs. our estimate of Rs552mn. Its volume increased in replacement segment supported by ramp-up in 2W/3W segment, while OEM sales declined in higher double-digit...

Pre-buying of BS-VI vehicles and radialisation of tyres could drive growth in the coming years. However, the near-term outlook remains challenging due to sluggish economic growth. We reiterate our HOLD...

While the radialisation of tyres and pre-buying of BS-VI vehicles should drive growth in coming years, near-term outlook remains challenging. We downgrade the rating of the stock to HOLD, with a revised target price of Rs. 60, based on 5.0x FY21E adj. EPS. Topline growth despite sluggish auto market JK Tyre posted Q1FY20 revenue of Rs. 2,575cr (+5.6% YoY; -4.8% QoQ). Despite weak demand in the Indian market, the company achieved a 5.7% YoY growth in domestic revenue, while revenue from Mexico declined 1.6% YoY to Rs.339cr. Sales from OEMs...

Muted OEM demand to limit volume growth across segments! JKTIL is the market leader in the truck-bus radial (TBR) segment with ~30% market share. Overall CV segment forms 65-70% of the company's volume mix, with PV and others (2-W, 3-W, off road) forming the rest. We feel the CV space on the OEM side in particular is in the late stages of an up-cycle and is likely to remain a pain point amid upcoming transition to BS-VI norms. The overall OEM demand for tyre players (30% of JKTIL's channel mix) would remain subdued, going forward, given the challenging environment...

Replacement demand, subsidiary ramp up to support! JKTIL's channel mix is at ~33% OEM, ~57% replacement and ~10% exports. CV demand constitutes ~70% of revenues with PV space forming ~20% and the rest accounted for by 2-W, 3-W, tractors and off road segments. The company is the market leader in the truck-bus radial (TBR) segment with >30% market share and post the Cavendish acquisition, its 2W, 3-W slate is ramping up well (40% YoY volume increase in 2-W, 3-W for FY19). For FY19, the company outgrew the industry despite OEM slowdown in H2FY19, with the management hopeful of a better show from Q2FY20E...

ICICI Securities Ltd | Retail Equity Research JK Tyres & Industries' (JKTIL) reported mixed set of results for Q3FY19. On a consolidated basis, revenue came in at | 2,731 crore (up 28.6% YoY). Gross Revenue from India increased by ~26.1% YoY to | 2,437 crore while revenue from Mexican operations grew by ~41.4% YoY to | 328 crore. According to the management, JKTIL witnessed higher sales volumes across categories, with Truck Bus Radial (TBR) segment volumes growing by 30% YoY in 9MFY19....

JK Tyre Operating efficiencies partially negate impact of high RM costs and rupee depreciation JK Tyre reported Q3FY19 numbers. While topline beat our expectations, profit was...

JK Tyre Operating efficiencies partially negate impact of high RM costs and rupee depreciation JK Tyre reported Q3FY19 numbers. While topline beat our expectations, profit was...

ICICI Securities Ltd | Retail Equity Research On a consolidated basis, revenues were at | 2,494 crore (up 21.2% YoY), above our estimate of | 2,374 crore. Gross revenue from India increased ~19.3% YoY to | 2,202 crore (volume growth of ~14% & pricing growth of ~5%) while revenue from Mexico grew ~28% YoY to | 323 crore (volume & price grew 18% & 10%, respectively) EBITDA margin was at 10.5% (up 101 bps YoY but down 282 bps QoQ) vs. our estimate of 13%. On a QoQ basis, gross margin...

ICICI Securities Ltd | Retail Equity Research On a consolidated basis, revenues were at | 2,440 crore (up 35% YoY), vs. our estimate of | 2,164 crore. Revenue from India (adjusting excise duty) increased ~36.4% YoY to | 2,137 crore (volume of standalone business grew 35% YoY to ~96,000 MT) while revenue from Mexican operation grew ~21% YoY to | 345 crore (with volume growth of 20% YoY to ~16,000 MT) The EBITDA margin came in at 13.3% (down 108 bps QoQ) vs. our...