KR Choksey's research report on Balkrishna Industries
For Q4FY24, Balkrishna Industries (BKT) reported robust revenue of INR 26,819 Mn, a growth of 15.7% YoY/ 17.9% QoQ. The reported revenue was outperformed our estimated. For FY24, revenue declined by 4.0% YoY to INR 93,689 Mn. EBITDA for the quarter grew by 42.0% YoY/ 26.0% QoQ to INR 6,811 Mn, which was ahead of our estimate on robust revenue growth and favorable operating leverage. For FY24, EBITDA grew by 39.3% YoY to INR 22,554 Mn. PAT for Q4FY24 was INR 4,868 Mn (+87.4% YoY/ +59.4% QoQ), beating our estimate on lower-than-estimated other income (+199.5% YoY/ +160.2% QoQ). PAT for FY24 was INR 14,715 Mn, which grew by 39.2% YoY. We raise our FY26E EPS by ~10%, reflecting improved margins and growth expectations on planned capex. We also reflect this in our raised multiple to 26.5x (previously: 25.4x) and arrive at a raised target price of INR 2,998/share (previously: INR 2,598). Given the downside, we downgrade our rating to “REDUCE” on Balkrishna Industries Ltd.
Outlook
We assign a P/E multiple of 26.5x (previously: 25.4x) to FY26E EPS of INR 113.1 to arrive at a price target of INR 2,998/share (previously: INR 2,598) on the back of the increase in growth and margin expectations. Despite this increase, we remain cautious given the recent run-up in the stock price. At the current levels, we reckon that the shares factor in the margin improvement and in fact, trade at slightly stretched valuations. Given the marginal downside potential, we downgrade our rating to “REDUCE” from “HOLD” on the shares of Balkrishna Industries.
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Balkrishna Industries - 30052024 - kr