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Informist, Thursday, Jul. 30, 2026

 

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--Balkrishna Ind: Demand for carbon black continues to be robust
--CONTEXT: Comments by Balkrishna Ind's mgmt in post-earnings analyst call
--Balkrishna Ind: Low materials availability, weather may hurt in near term
--Balkrishna Ind:Spent INR 9.25 bln to expand carbon black unit, power plant
--Balkrishna Ind: Projects with INR-30-bln capex for FY27 progressing well
--Balkrishna Ind: Spent INR 10 bln in capex during Apr-Jun
--Balkrishna Ind: Q1 margin hit on high input cost, prices hike helped partly
--Balkrishna Ind: Took 5% price hike, part impact from Q2 onwards
--Balkrishna Ind: See 3% impact on sales due to input costs, 2% margin hit
--Balkrishna Ind: See rise in freight rates going forward, may pass on costs
--Balkrishna Ind: Plan INR-68-bln capex for topline of INR 230 bln by 2030
--Balkrishna Ind: Have applied to get refunds from US for tariff levies 
--Balkrishna Ind: Q1 staff costs high on wage rise in Gujarat, increments
 

 

By Sunil Raghu and Shruti Nair

 

AHMEDABAD/MUMBAI – Balkrishna Industries Ltd. Thursday said that the ongoing geopolitical uncertainty, with the supply chain impact on both availability of materials as well as costs, could be key variables for performance in the coming quarters.

 

"Availability of vessels, containers and trade costs as well. These, along with weather challenges in Europe and the sketchy monsoon which is expected in India, as key variables towards near-term performance problems," the management told analysts in a conference call post tje company's June quarter earnings.

 

Talking about its carbon black business, the management said that while demand was good, it expected "geopolitical challenges" to impact the pricing and supply of the product due to rising crude oil prices. Carbon black is used as a reinforcing filler in rubber products and as a black pigment in inks, coatings, and plastics. "We expect some price increases to offset the raw material inflation," the management said.

 

The off-highway tyre company posted a standalone net profit of INR 4.32 billion for the June quarter, up over 50% from INR 2.87 billion in the year-ago quarter. The company earned INR 34.45 billion in revenues, nearly 25% higher than INR 27.60 billion reported for the year-ago quarter. 

 

In Apr-Jun, Balkrishna Industries' total expenses rose 20% on year to INR 29.61 billion. The company's cost of materials consumed rose 49% on year to INR 18.6 billion. Its employee costs were up nearly 18% year-on-year at INR 1.53 billion. The management attributed this increase to the wage revision implemented in Gujarat, on giving increment to its staff, and increasing the number of employees for new business.

 

The company reported an operating margin of 15.09% for the June quarter, up from 11.49% for the year-ago quarter. The company's net profit margin was 12.2% for the June quarter, up from 10.02% in the year-ago quarter. The management said that margins for the June quarter were impacted by raw material prices due to political situation globally and its impact on supply chain. "The impact was partially offset by certain price hikes during the quarter. Further, India's contribution has increased to overall 40% of the volume, which has impacted the margin slightly," the management said.

 

The company raised its product prices by up to 5% and believes that partial impact of the price hike would be felt the September quarter onwards. The management expects a 5% impact on raw material costs in the December quarter, which could impact the company's sales by about 3% and 2% of their margins, the management said. The company sees freight rates going up if current global political uncertainty continues and said it would explore how best it can pass this on.

 

During the June quarter, the company's off-highway tyre segment posted its highest-ever quarterly sales volume of 93,770 tonnes, up over 16% on year. The segment's sales contributed 90% to the overall revenues. A majority of off-highway tyre sales come from the agricultural segment. More than 71% of the off-highway tyre segment's sales came from replacement demand, 27% from original equipment manufacturers, and the rest from others. Geographically, India accounted for almost 40% of sales in the off-highway tyre segment, Europe contributed 38%, and sales from the US were 12%. The remaining 10% sales were from the rest of the world.

 

In February, the company launched its on-highway business, starting with commercial vehicles and two-wheelers. The company aims to earn 20% of its revenues from this business by the financial year 2029-30 (Apr-Mar), still keeping off-highway tyres as its main business, whose share could come down to 70% by 2030. The rest of the revenues will come from sales of carbon black. The company has commissioned phase-2 of its carbon black plant, expanding the capacity to 360,000 million tonnes per annum.

 

Balkrishna Industries plans to spend INR 68 billion in capex and achieve a topline of INR 230 billion by 2030. The company spent INR 10 billion in capital expenditure during the June quarter, including INR 8 billion for expansion of carbon black plant. It also plans to spend another INR 10 billion-INR 15 billion in capex during the current financial year, even as projects involving capex of INR 30 billion were "progressing" well and as planned, the company said.

 

Talking about certain tariffs imposed by the US government under emergency powers, Balkrishna Industries' management said it had filed claims for refund pending final settlement. A US court had ruled that the government might have exceeded its legal authority in imposing the tariffs and asked it to refund tariffs to companies exporting products to the US.

 

At 1346 IST, shares of the company were at INR 2,247.30 on the National Stock Exchange, up nearly 8%.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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