Balkrishna Industries Shares Tumble 9% After Q4 Results; Key Points to Know

Balakrishna Industries Shares Rise: Shares of Balakrishna Industries traded down 9 per cent on May 29 after the company reported an on-year decline in net profit, revenues, and operating profit for the March quarter.

The tyre maker reported a consolidated net profit of Rs 259.8 crore in Q4 FY23, registering a decline of 30.7 per cent, compared to Rs 374.84 crore in the corresponding quarter last year.

The company’s consolidated revenue from operation fell by 2.4 per cent to Rs 2,317 crore for the March quarter as compared to Rs 2,374.2 crore in the year-ago period.

In its investor presentation, the company said that although historically the fourth quarter has been the best-performing period, there were still challenges in the channel inventory situation. However, the company anticipates that these issues will likely be resolved by June or July.

Nomura, in its assessment of Balkrishna Industries, has given a ‘neutral’ rating and set a target price of Rs 2,015 per share. The company’s financial performance showed a decline in revenue, volumes, and average realisations, although tonnage witnessed an increase, Nomura said.

While the margin was partly offset by higher operating expenses relative to sales, the impact of high-cost raw material inventory was evident in the raw material-to-sales ratio. Additionally, a decrease in other income contributed to a decline in profit after tax (PAT), the brokerage firm said.

Domestic brokerage Motilal Oswal said, “The volume of sales declined 6 per cent YoY (up 9 per cent QoQ) to 72.7k tons (inline). The 4Q, despite traditionally being a robust period, experienced channel inventory clearance in the end markets. This situation is expected to be resolved by June/July’23. However, there have been positive sequential improvements in volumes from the end markets, and there has been a partial clearance of high-priced RM.”

“The company expects Europe to normalize later during the year, while America and India are expected to continue the momentum of FY23. Benign RM costs, better hedge rate, and complete normalization of logistic costs would aid margins going forward,” the brokerage firm said.

Motilal Oswal has a Neutral rating on Balkrishna Industries.

However, on a year-to-date, the stock has surged nearly 10 per cent, while it has risen 15 per cent in the last six months.

As per Trendlyne data, the average target price of the stock is Rs 2,099, which shows a downside of 10 per cent from the current market prices. The consensus recommendation from 22 analysts for the stock is a Hold.