Balkrishna Industries shares hit new 52-week high post Q2 numbers; should you buy?

livemint.com:

Balkrishna Industries, one of the leading manufacturers of over-the-highway tyres, extended their winning streak for the second consecutive trading session on Wednesday, rallying 2.84% to register a new 52-week high of ₹2,640. This increase in stock price is attributed to the company's Q2 FY24 performance, which came in line with analyst estimates. The company on Saturday reported a net profit of ₹335 crore for Q2 FY24, in comparison to ₹404 crore in Q2 FY23, while revenues came in at ₹2,226 crore, down from ₹2,704 crore.

In Q2, the company faced challenges on account of heatwaves and recessionary fears in export markets, resulting in a drop in volumes during the quarter. The company volumes dropped by 10% YoY to 70.6k tons in Q2FY24. Sequentially, volumes improved by 5%.

Overall, the company expects a stable trajectory to continue and better H2FY24. However, given the H1FY24-related challenges and volume performance, the company expects FY24 volumes to de-grow marginally. Following the company's Q2FY24 performance, domestic brokerage firms have maintained their existing ratings on the stock.

Domestic brokerage firm Sharekhan retained its 'hold' call on the stock with a revised target price of ₹2,720 apiece in the hope of a revival in demand in the medium term and improvement in EBITDA margins on a steady raw material cost trend. The brokerage said the company continues to be a dominant player in the global OHT segment, supported by its strong distribution network, quality of product, and relatively low-cost production. However, it anticipates that the company may encounter challenges in the near term owing to ongoing destocking in the European market.