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You are here : IndiaNotes >> Research & Analysis >> Companies >> Balkrishna Industries Ltd. >> Research

Balkrishna Industries: Buy for medium to long-term investment

Suhani Adilabadkar | 11 Jan, 2017  | Follow Author | Add to my Favourites 
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BALKRISHNA Industries Ltd reported strong September quarter with PAT galloping at 129% YOY on the back of high operational performance, high volume growth and forex gains. PAT stood at Rs. 2429 Mn against Rs. 1062 Mn corresponding period previous year. Sequential growth has also been strong up 63% in the current September quarter. Revenue was seen at Rs. 9465 Mn rising 15% YOY, though growth was almost stagnant sequentially. EBDITA was reported at Rs. 3522 Mn in Q2 FY17 against Rs. 2759 Mn corresponding quarter previous year, registering a double digit growth of 28% YOY. On quarterly basis rise was 8% in the current Q2 FY17. Profit Before tax at Rs. 3338 Mn doubled on yearly basis and grew 47% sequentially as forex gain of Rs.588 Mn was reported in the current September quarter. Other Income too played it’s part multiplying 2.3 times YOY buttressing company’s bottom-line in the current quarter. Other Income was reported at Rs. 448 Mn compared to Rs. 198 Mn in corresponding quarter previous year. Higher volume growth, controlled cost structure reduced finance costs have led to phenomenal growth for both EBDITA & Net Profit Margins. EBDITA Margin jumped 364 bp whereas Net Profit Margin doubled YOY. One basis point is 1/100th of a percentage. EBDIA & Net Profit Margin stood at 37.22% & 25.66% in the current September quarter. The company is also focused on deleveraging itself and interest costs have been declining over the previous 4-5 quarters.

Balkrishna Industries Ltd (BKT) with market cap of Rs. 105058.55 Mn and has more than 85% of its earnings dependent on exports. The company has performed in the backdrop slow global growth and high currency fluctuations. In addition to that BKT is also focused on rationalizing its debt burden and has repaid Long Term Debt of Rs. 2230 Mn. The company has current cash holdings of about Rs.10130 Mn. We recommend BUY for the stock for medium & long term investment with PE multiple of 13.54 x FY17E & 13.01 x FY18E with a target price of Rs. 1195.

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About Suhani Adilabadkar

Suhani Adilabadkar is a Research Analyst registered with SEBI ((INH200003240)) She has done PGDBA (Finance), MS (Finance) and a Fellowship from Insurance Institute of India. She maintains a blog where she publishes research reports across industries -

For more information please write in to [email protected]

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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