Tyre maker Balkrishna Industries' stock down 10% in firm market; here's why

Balkrishna Industries share price: Balkrishna Industries' reported standalone net sales for the quarter were up 2.8 per cent year-on-year (Y-o-Y), at ₹2,747 crore

Balkrishna Industries share price today

 

Balkrishna Industries (BKT) shares slipped 10 per cent to ₹2,385 on the BSE in Monday's intraday trade, in an otherwise firm market, after the company reported lower-than-expected profit after tax (PAT) in the March 2025 quarter (Q4FY25) primarily due to forex loss.

 

The company also plans a modular entry into premium passenger car radial tires and commercial vehicles radial tires with initial focus on the domestic replacement market in both categories.

 

At 09:34 AM, BKT was quoting 9.7 per cent lower at ₹2,402.70, as compared to 0.78 per cent rise in the BSE Sensex.    Catch Stock Market Latest Updates Today LIVE

 

Q4 results

 

Balkrishna Industries' reported standalone net sales for the quarter were up 2.8 per cent year-on-year (Y-o-Y), at ₹2,747 crore, amid flat tyre sales volume of 82,062 tonne.

 

Earnings before interest, taxes, depreciation and amortisation (Ebitda) margins in Q4FY25 came in at 21.9 per cent, down 124 bps Q-o-Q. The margin contracted due to higher input costs, which are likely to have peaked in Q4. PAT for the quarter stood at ₹362 crore, down 24.7 per cent Y-o-Y, primarily due to an unrealised forex loss.

 

Management commentary

 

The management earmarked an ambitious five-year roadmap to scale up revenue by 2.2x to ₹23,000 crore by 2030. This would be driven by continued outperformance in its core OHT segment (70 per cent contribution estimate by 2030), where it targets to move to an 8 per cent share by 2030 from 6 per cent currently, for which capacity is being expanded to 425k MT per annum from the current 360k MT per annum; 10 per cent contribution from sales of carbon black to a third party, for which carbon black capacity is being increased to 360k mtpa from the current 200k mtpa; and a foray into Truck and Bus Radial (TBR) and premium Passenger Car Radial (PCR) segments, which is expected to contribute to 20 per cent of revenue by 2030.

 

For this ambitious growth, BKT has earmarked ₹3,500 crore capex over the next three years, in addition to the ₹50-70 crore capex that would be invested in the core segment. Given its backward integration capabilities and market understanding, management does not expect this foray to materially dilute either margins or returns by 2030.  ALSO READ | Tata Motors share price gains 3% in trade; What's driving surge in stock?

 

Motilal Oswal Financial Services on Balkrishna Industries shares

 

BKT continues to face demand headwinds in its key global markets. Hence, the brokerage firm has cut its earnings estimates by 8 per cent each for FY26/FY27. Further, its foray into the PCR/TBR segments is likely to be critically monitored from here on for whether or not it is able to gain material traction in these segments and would margins and returns be materially dilutive in the long run.

 

"While the stock has not done well in the recent past and its valuations at 27.7x FY26E and 22.9x FY27E are not too demanding, its future target multiple is likely to be a function of its success in these new segments," MOFSL said.

 

The success will not only be in terms of market share gains but also without materially hurting core returns – which is likely to be a herculean task, in our opinion. The brokerage retained its target multiple for BKT and continues to value it at 22x FY27E. However, this may warrant a change going forward if BKT's returns plunge due to this foray. Reiterate Neutral with a target price of ₹ 2,553.  ALSO READ | Transrail Lighting shares soar 11% after Q4 results; best session since Jan

 

ICICI Securities on Balkrishna Industries

 

The company announced a focused capex of ₹3,500 crore over three years — entirely funded through internal accruals — is aimed at expanding capacity in its core Off-Highway Tire (OHT) segment, scaling its carbon black operations, and entering new high-potential radial tire categories in India (TBR, PCR replacement).

 

With clear revenue targets for each growth lever, backward integration benefits, and a healthy net cash position, BKT is well-positioned to compound earnings over the medium term.

 

However, these new segments have historically commanded less margins, RoCE profile, and valuations than BKT's base OHT business, which will have long term implications for its blended margins, RoCE's and valuations.

 

The brokerage firm expects the stock to open negative on its diversification efforts into mass segments carbon black and TBR & PCR segments. This shall challenge the premium valuations commanded by the company in the past.