Apr'25 View on Balkrishna Industries Ltd

Balkrishna Industries Limited (BKT) started its Off-Highway tyre business in 1987. For over 30 years, BKT has successfully focused on specialist segments such as agricultural, construction and industrial as well as earthmoving, port and mining, ATV, and gardening applications. • BIL’s Q3FY25 adjusted EBITDA, which was in line with our estimates. • Cautiously optimistic outlook spelled by global off-highway and tractor OEMs over the coming quarters. • We expect margins to be under pressure marginally. • We expect earnings per share (EPS) to grow by 5.8% in FY26E & 13.8% in FY27E. • SELL stays; revised FV of Rs2,400, based on 23x Mar 2027E EPS; valuation expensive. Q3FY25 Earnings update: Positives: • Revenues increased 11% yoy and were in line with our estimate. • Average selling price: +6% yoy due to richer product mix/favorable foreign exchange. • EBITDA margin came in at 24.9%; 30 bps above our estimates. Negatives: • EBITDA/kg declined 1% qoq in Q3FY25 due to higher staff costs and RM headwinds. • European Union (EU): 16% yoy decline in volumes in Q3FY25. • Co. highlighted there will be a 1.0-1.5% qoq increase in the RM basket in Q4FY25E.