Shares of JK Tyre and Industries slumped over 6 percent in early trade on May 18 as investors cashed in partial profits following strong quarterly earnings. This comes on the back of a strong run in the counter in recent months.
In the past three months, the stock has clocked in over 23 percent gains, giving investors room to book partial profits. In the past three years, the share price has gone up from Rs 50 to 190, reflecting investor confidence in the company's prospects.
At 10.54 am, shares of JK Tyre were trading 4.86 percent lower at Rs 189.90 on the National Stock Exchange.
In the fourth quarter, the company's consolidated net profit surged over two-fold on year to Rs 112 crore, aided by robust demand in the domestic market for both passenger and commercial vehicle radial tyres.
Total income rose to Rs 3,645 crore from Rs 3,320 crore in the year-ago period. EBITDA margin also expanded to 10.4 percent in Q4 from 6.9 percent in the corresponding quarter of the previous year.
Also Read: JK Tyre Q4 net jumps over two-fold to Rs 112 crore; records highest-ever revenue for FY23
Despite some apprehension from ICICI Securities over the company's sequential gross margin expansion on a standalone basis lagging its peers, most brokerages remain upbeat about the tyre maker's long-term prospects.
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"We expect market share gain by JK Tyre and subsidiary Cavandish to support volumes for the company," said Mitul Shah, Head of Research at Reliance Securities.
Shah also believes volume pick up in two and three -wheeler tyres with new capacity and recovery in medium and heavy commercial vehicles sales will improve the company's profitability.
"In view of the expected revival in replacement demand and ongoing traction in original equipment manufacturers and exports, at present, we have a 'buy' call on JK Tyres," Shah added.
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