Tyremaker Balkrishna's stock in top gear, but beware the bumps
Balkrishna Industries Ltd's stock. But it seems like the worst of this problem is behind as demand is seen recovering in the end market. Inventory at the dealer level in the key European market normalized to 40-45 days in the March quarter, similar to what it was in the preceding three months, the management said.
Contrary to expectations of shipment delays due to the Red Sea crisis, business picked up for export-focused Balkrishna Industries between January and March. In effect, volume rose 13% year-on-year to around 82,085 tonne in the March quarter. This was driven by strong growth in the agriculture tyre segment and improved replacement demand from the North American market.
The jump comes after the company's volumes declined in financial year 2023-24, although only by 3% year-on-year. Due to the ongoing geopolitical tensions, Balkrishna's management refrained from providing volume guidance. However, volume decline is not expected in FY25.
The management foresees stable demand in the US. And in the domestic market, Balkrishna eyes a 10% market share in the medium-term, up from 5-6% market share currently. The Street gave Balkrishna's upbeat commentary and better-than-anticipated fourth-quarter results a thumbs-up.
The stock zoomed 10% on Tuesday, hitting a fresh 52-week high of ₹3,174.30 per share on NSE. “Post a period of subdued demand impacted by channel destocking (flat volumes over FY22-24), we expect Balkrishna Industries to benefit from the upcycle," Nomura Financial Advisory and Securities (India) said in a report. “Balkrishna Industries has gained market share in India (mix increased from 11% in FY22 to 27% in FY24), and globally as well, according to our analysis of listed pees, which should help it to
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