Balkrishna Industries Shares Tumble 10% on Weak Q4 and Diversification Concerns

Shares of

na Industries (BKT) plunged by as much as 10% on May 26 after the company reported a significant 25% decline in standalone net profit for the March quarter (Q4FY25). The profit stood at Rs 362 crore, impacted by higher input, employee, and finance costs, despite a 5% year-on-year revenue growth to Rs 2,838 crore. The market reacted negatively not only to the weaker quarterly earnings but also to the company's aggressive Rs 3,500 crore capital expenditure plan aimed at diversifying into more competitive tire segments. Brokerage firm Nomura downgraded Balkrishna Industries to 'Neutral' from 'Buy', sharply cutting its target price to Rs 2,644 from Rs 3,242. Nomura expressed concerns that this diversification could lead to margin compression and lower returns on equity, particularly given the substantial investment required for brand-building and distribution in highly competitive categories. The brokerage now favors Ceat over Balkrishna Industries among tire stocks. While Q4 operating performance was mixed, with EBITDA rising a modest 1% year-on-year to Rs 703 crore but margins slipping to 24.78% due to raw material inflation, the full year (FY25) saw over 13% growth in net profit to Rs 1,628 crore on revenue of Rs 10,615 crore. At approximately 10:20 am, Balkrishna Industries shares were trading at Rs 2,416 on the NSE, down 9.2% from their previous close. The stock has seen a 17% decline since the beginning of the year.