Moneycontrol
Feb 17, 2017 02:38 PM IST | Source: Moneycontrol.com

Buy JK Tyres; target of Rs 145: ICICI Direct

ICICI Direct is bullish on JK Tyres has recommended buy rating on the stock with a target price of Rs 145 in its research report dated February 16, 2017.

Buy JK Tyres; target of Rs 145: ICICI Direct


ICICI Direct's research report on JK Tyres


EBITDA margins contracted 242 bps YoY & 570 bps QoQ to 14.4% below our estimate of 17%. Higher input cost (average natural rubber prices were up 14.2% YoY to Rs 124/kg) impacted the gross margins of the company, down 104 bps YoY & 440 bps QoQ.


Outlook


Any positive development on part of the government in terms of restricting import of Chinese tyres, going forward, will benefit JKTIL. Thus, we value JKTIL at 4x FY19E EV/EBITDA. We maintain our target price of Rs 145 with a BUY rating on the stock.

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