Earnings Outlook
Higher volumes to aid Balkrishna Ind's Oct-Dec earnings
This story was originally published at 20:56 IST on 23 January 2025
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By Akshay V. Johnson
MUMBAI – Balkrishna Industries Ltd. is expected to report double-digit year-on-year growth in revenues and net profit for the December quarter, largely on account of higher volumes and realisation, according to analysts. If the results are in line with the estimates, the latest quarter will be the fourth consecutive quarter of growth in revenues and net profit. Most brokerages expect the company to report a contraction in its earnings before interest, taxes, depreciation, and amortisation margin for the quarter on account of higher freight and raw material costs.
The company is expected to report a net profit of INR 3.85 billion for the December quarter, up 24.6% on year, with revenue growing by 10.2% to INR 25.13 billion, according to an average of estimates from eight brokerages. Sequentially, the net profit is seen rising 10.1%, while revenue is seen up 3.2%. The company had reported a net profit of INR 3.50 billion on revenues of INR 24.36 billion in Jul-Sept and a net profit of INR 3.09 billion on revenues of INR 22.80 billion a year ago.
The estimates for Balkrishna Industries' Oct-Dec net profit range from INR 3.49 billion by Nuvama Wealth Management Ltd. to INR 4.41 billion by Nirmal Bang Pvt. Ltd. The estimates for revenue range from INR 24.00 billion by Nuvama to INR 25.90 billion by Incred Research Services Pvt. Ltd.
The company's volumes are expected to increase 5% on year to 76,000 tonnes in the December quarter, Kotak Institutional Equities said. Balkrishna Industries' volume growth will be driven by steady demand from its Indian operations and a favourable base, but this will be partly offset by weak demand for off-highway tyres in the European Union and the US, the brokerage said. Kotak Institutional Equities estimates the revenues to see double-digit growth in the December quarter, driven by a 7-8% increase in average selling price due to the company passing on the higher freight costs to the consumers and favourable exchange rates. The brokerage estimates an on-year decline in EBITDA margin by 80 basis points due to raw material headwinds and higher freight costs. The decline in EBITDA margin will be offset by favourable foreign exchange rates, the brokerage said.
The company took a price hike of 1-2% in the December quarter, which is equivalent to the rise in input costs, Motilal Oswal Financial Services Ltd. said. The brokerage expects some reduction in freight costs on a sequential basis. The overall EBITDA margin is expected to decline 40 basis points on year to 24.9% due to high raw material costs, the brokerage said.
The company is seen posting an EBITDA of INR 6.25 billion in the quarter, up from INR 5.88 billion in the same period last year, according to the average of estimates from six brokerages. Most analysts expect the company's EBITDA margin to decline on year.
Between Oct. 25, when it reported its September quarter earnings, and Jan. 22, shares of Balkrishna Industries have fallen 7.5%. Of the 12 brokerage reports of the company available with Informist, four have a 'buy' rating, five have a 'hold rating', and three have a 'sell'.
The company will announce its earnings for the December quarter on Saturday. On Thursday, shares of the company closed at INR 2,728.90 on the National Stock Exchange, up 0.8% from the previous close.
Following are the Oct-Dec earnings estimates for Balkrishna Industries based on reports from eight brokerage firms in descending order of net profit estimate:
Brokerage firm | Net Sales (in INR million) | Net Profit (in INR million) | EBITDA (in INR million) |
Nirmal Bang Equities Pvt. Ltd. | 25,245.00 | 4,412.00 | 6,236.00 |
Kotak Institutional Equities | 25,816.00 | 4,017.00 | 6,345.00 |
Sharekhan Ltd. | 24,620.00 | 3,900.00 | -- |
Incred Research Services Pvt. Ltd. | 25,900.00 | 3,865.00 | 6,553.00 |
Motilal Oswal Financial Services Ltd. | 25,202.00 | 3,834.00 | 6,275.00 |
KR Choksey Research | 24,545.00 | 3,687.00 | 5,985.00 |
Anand Rathi Share and Stock Brokers Ltd. | 25,710.00 | 3,599.00 | -- |
Nuvama Wealth Management Ltd. | 23,998.00 | 3,486.00 | 6,122.00 |
Average | 25,129.50 | 3,850.00 | 6,252.67 |
End
Edited by Saji George Titus
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