Add Balkrishna Industries, target price Rs 2837: ICICI Securities

Synopsis

The major product / sales segments of Balkrishna Industries Ltd. include tires and tubes, export incentives, scrap and other operating income for the year ended March 31, 2021.

ICICI Securities has Balkrishna Industries with a price target of Rs 2837. The current market price of Balkrishna Industries is Rs 2667.3

The period indicated by the analyst is a year in which the price of Balkrishna Industries Ltd. can achieve the defined target.

Balkrishna Industries Ltd., founded in 1961, is a large-cap company (with a market capitalization of Rs 52044.85 million) operating in the tire industry.

The most important product / sales segments of Balkrishna Industries Ltd. include tires and tubes, export incentives, scrap and other operating income for the year ended March 31, 2021.

Financials

For the quarter ended 30062021, The company reported consolidated total revenue of Rs 1885.08 crore, 3.88% more than the last quarter total revenue of Rs 1814.74 crore and 92.61% more than the last quarter total revenue of Rs 978.70 crore. The company reported net income after tax of Rs 330.56 crore for the most recent quarter.

Investment Ratio

 Given that BIL achieved high utilization (8590%) in fiscal 23E (assuming 19% sales CAGR compared to fiscal 21GJ24E), we expect an improvement in RoCE to 28% and a FEL production of Rs36 billion (cumulative through fiscal year 23EFY24E). The Export Incentive Program (RoDTEP) could also increase profitability. The brokerage firm is submitting estimates for FY24E and a rollover through Sept. 23, and is maintaining the target multiple at 26x EPS from Sept. 23 based on strong growth transparency and top quartile performance metrics. Repeat ADD with a price target of Rs 2,837 (previously: Rs 2,572).

 Promotores / FII Holdings As of June 30, 2021,

 Promotores owned 58.3 percent of the company’s shares, while FII held 15.2 percent, DIIS 14.1 percent and the public and another 12.4 percent.

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