JK Tyre up 14%, hits fresh high on strong Q2, capex plan of Rs 1,025 crore

Shares of JK Tyre & Industries rallied 14 per cent to a new all-time high of Rs 351.05 on the BSE in Thursday’s early trade.

The stock jumped on the company's strong operational performance in the September quarter (Q2FY24) and surpassed its previous high of Rs 344 touched on October 17.

At 09:40 AM; JK Tyre was trading 8 per cent higher at Rs 334, as compared to 0.93 per cent rise in the S&P BSE Sensex. The average trading volumes on the counter jumped nearly four-fold today. A combined 6.7 million equity shares have changed hands on the NSE and BSE.

Sensing the market demand, the company announced a fresh capex of Rs 1,025 crore to be commissioned by October 2025.

The above project is proposed to be funded by way of equity/internal accruals and debt. The board also approved fund raising up to Rs 500 crore by way of qualified institutions placement (QIP) or other permissible mode.

JK Tyre said the lndian auto industry is witnessing good growth, which is expected to continue for some time. This gives an opportunity to increase its market presence further in the automotive tyre market, the company said.

In Q2FY24, JK Tyre’s consolidated profit after tax jumped nearly five-fold to Rs 249 crore against Rs 50 crore in the year ago quarter.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 95.7 per cent YoY at Rs 589 crore with corresponding EBITDA margin at 15.1 per cent, up 718 bps YoY.

Consolidated turnover were up 4 per cent year-on-year (YoY) at Rs 3,905 crore.

The sustained thrust on larger market presence boost volumes across segments and product categories. The strategic focus on enrichment of product mix across the entire Radial range, PCR/LTR/TBR has had positive outcome, the management said.

The company posted healthy cash flow from operating activities in H1FY24 at Rs 1065 crore with consequent free cash flow and reduction in gross debt pegged at around Rs 700 crore and Rs 450 crore respectively.

Its gross margin performance came in robust and was ahead of our expectations, ICICI Securities said in a note.

Management commentary on sustenance of these superlative margins and debt trajectory will be the key monitorable going forward, the brokerage said.