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Informist, Friday, Jul. 25, 2025

By Adhithya Aji

MUMBAI - Balkrishna Industries Ltd. is expected to report an on-year fall in its net profit for the June quarter due to weak export volumes and uncertainties relating to geopolitical tensions and US tariffs. The hike in shipping rates are expected to slow down the earnings of the company. Some analysts estimate that the company's Gujarat plant may have been shut down during the India-Pakistan conflict and if that has happened, it would affect the volumes and earnings of the company. Most brokerages expect only a marginal growth in the company's revenue.

The tyre maker is expected to post a standalone net profit of INR 4.1 billion, down more than 14% on year and up almost 13% on quarter, according to an average of estimates from seven brokerages. The highest estimate for net profit is INR 4.53 billion by InCred Research Services Pvt. Ltd. and the lowest estimate is INR 4 billion from Nirmal Bang Equities Pvt. Ltd.

The top line of the company for the June quarter is estimated at INR 27.92 billion, up 4% on year and up marginally on quarter. The highest estimate for revenue is INR 31 billion by InCred Research and the lowest is INR 27 billion by Nirmal Bang.

Brokerages expect Balakrishna Industries' net profit to decline on year due to weak demand in most of company's overseas markets. Besides low demand for Off Highway Tyres in the European Union and the US, tariff related challenges will constrain the profitability of the tyre maker. A hike in ocean freight is estimated to impact the net profit, brokerages tracking the company said.

HDFC Securities reasoned that a 2.7% decline in the company's production volume could be caused due to probable plant closure in Bhuj during the India-Pakistan conflict. "...which we believe would have also led to a delay in the return of migrant labour," HDFC Securities said.

"Tariff-related delays in decision making and impact of Iran-Israel conflict resulted in lower export volumes with expectation of a -3% YoY volume for BKT (Balkrishna Industries)," Nirmal Bang said.

Kotak Institutional Equities expects the revenue to grow marginally on year due to the hike in average selling price caused by the pass through of higher freight cost. Richer product mix and the depreciation of the rupee against the euro will benefit the company with large export dependency, according to Kotak.  

The company is expected to report an earnings before interest, taxes, depreciation, and amortisation of nearly INR 7 billion, according to the average of estimates from five brokerages. The highest estimate for EBITDA is INR 7.3 billion by InCred Reseach and the lowest is INR 6.4 billion by Nirmal Bang.

"Though RM (raw material) costs have eased, we expect the benefits to be partially negated by higher ocean freight costs, leading to a quarter-on-quarter dip in EBITDA margins," HDFC securities said. HDFC Securities estimates a 46 bps contraction in the company's EBITDA margin sequentially to 24.4%. Kotak expects the EBITDA margin to decline by 140 bps on year due to rising raw material costs, particularly for natural rubber, and negative operating leverage.

Friday, shares of Balkrishna Industries closed at INR 2,685.80, down 1.5%, on the National Stock Exchange. The shares had fallen 6.7% after the company had announced its March quarter earnings on May 23 and have recovered just above the level they were before the March quarter earnings announcement. The company will announce its earnings for the June quarter Saturday. Demand and margin outlook are the key variables to watch.

Of the 13 research reports on the company available with Informist, six brokerages have a "sell" rating with an average target price of INR 2,372. Whereas five brokerages recommend a "hold" with an average target price of INR 2,815. Two brokerages have a "buy" rating.

Following are the Apr-Jun estimates for Balkrishna Industries Ltd. in INR million, based on seven broking firms in descending order of net profit:

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Edited by Akul Nishant Akhoury

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