PL Stock Report - Balkirshna Industries (BIL IN) - Visit Update - Building capabilities for the next phase of growth - Not Rated

Balkirshna Industries (BIL IN) - Himanshu K Singh - Research Analyst, Prabhudas Lilladher Pvt Ltd

Rating: Not Rated | CMP: Rs2,285 | TP: NA

Visit Update - Building capabilities for the next phase of growth

Quick Pointers:

§ Slowdown in US and Europe poses near term demand challenges

§ Targeting 10% global market share and entry in new segments in OTR

We visited Balkrishna Industries’ (BKT, BIL) Bhuj tyre plant that manufactures agri-radial & bias tyres, solid tyres and OTR tyres from 8” to 57” at c500k MT capacity. It has a power plant of 40 MW capacity plus carbon black plant of 170 ton capacity and is in process of starting 30k ton specialty carbon black facility. BKT has enough capacity for short term and all expansions will be brownfield in nature. BKT has been able to gain success in overseas market even at the competitors’ home turf (gained higher market share in the agricultural segment versus Michelin in France, Michelin’s home market). Overall, we liked the state of art and well integrated facility built over years.

At present BKT’s end markets are facing slowdown and recessionary environment in USA and Europe, which may impact volumes and margins in the near term. BKT seems well placed to capitalize on future growth led by led by 1) 10% global market share aspirations (6% currently), 2) entry in new segments in OTR 3) capacity expansion 2) improved emphasis on brand building and 3) expanding distribution network, more so in global markets. BKT is trading at 30x/25x PE on FY24/FY25E consensus earnings. Not rated.

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