BALKRISIND

continue to face subdued demand

➤

is under earnings pressure due to two major challenges: subdued global demand and margin erosion. ➤ In Q1 FY26, the company’s performance was impacted by weak demand in Europe—its primary export market—and tariffs in the US, which disrupted the order cycle. Sales volume declined by 3% YoY to 80,664 tonnes, and the firm refrained from issuing volume guidance for FY26. ➤ Revenue remained stagnant at ₹2,759 crore, while EBITDA dropped 8% to ₹656 crore. The EBITDA margin contracted by 228 basis points to 23.8%, falling short of expectations. Management has set an EBITDA margin target of 24–25% for FY26. ➤ A 10% base tariff applies to US-bound exports, of which 40% of the cost impact was absorbed by Balkrishna. This pressure is expected to persist into Q2 FY26. ➤ Nomura has flagged potential further tariff hikes (~15%), warning of continued pressure on demand and margins, and has cut FY26 EBITDA and EPS forecasts by 8% and 16%, respectively. Although raw material prices are likely to remain steady in Q2, margin stress is expected to continue. ➤ Balkrishna is venturing into domestic tyre segments like truck, bus, and passenger car radials, with product launches planned between Q4 FY26 and Q3 FY27. The firm has earmarked a ₹3,500 crore capex over the next three years, but analysts caution this expansion could dilute margins amid stiff competition.