Improving outlook leads to re-rating for Balkrishna Industries, stock gains

Capacity expansion expected to improve profitability

The stock of Balkrishna Industries has gained over 37 per cent in the last two months, on strong June quarter results and expectations of an uptick in global demand for off-the-road tyres. 

Brokerages have re-rated the stock after the quarterly results, given they expect robust volume growth and low-cost operations to reflect both on revenue and earnings trajectory over the next two years. The firm's net profit, for example, is expected to grow upwards of 30 per cent annually from FY18-20.

The key trigger, recently, has been the 36-per-cent year-on-year growth in revenues, led by 23 per cent growth in