Balkrishna Industries' shares surged 8 percent to a fresh 52-week in early trade on May 21. The shares extended their gains from the previous session after posting a better-than-expected Q4 earnings.
The tyre manufacturer reported a massive 87.4 percent increase in net profit at Rs 486.8 crore as compared to Rs 260 crore in the year-ago period.
Revenue growth for the fourth quarter was also strong at Rs 2,682 crore, up 16 percent compared to Rs 2,317 crore from the corresponding quarter of the previous fiscal.
At 9.40 am, shares of the company were quoting at Rs 2,996.8 apiece on the NSE, higher by 7.1 percent compared to the previous session's closing price.
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International brokerage Nomura upgraded its rating on Balkrishna Industries to buy, with a target price of Rs 3,230 per share, implying an upside of around 15 percent.
The brokerage said the firm is set to enter a demand upcycle, as global peers are also slated to see a recovery in H2FY25. Nomura said Balkrishna Industries' strong growth momentum is likely to continue and price hikes will support margins going ahead.
Motilal Oswal said the firm's performance for the quarter ended March significantly beat its estimates, but the brokerage reiterated its neutral rating, with an increased price target of Rs 2,535.
Retail demand in key global markets is currently on an upswing, while demand in India also remains healthy. However, the management refrained from giving any volume growth guidance for FY25 as the demand outlook in key regions remains uncertain due to the ongoing geopolitical tensions.
However, Citi and Kotak Institutional Equities kept their sell ratings intact.
Kotak noted that the near-term outlook for the company remains volatile as a result of ongoing geopolitical tensions. This might cause a delay in shipments, leading to possible pressure on margins.
Additionally, valuations are looking expensive to the domestic brokerage. Kotak has a target of Rs 2,175 per share, indicating a potential downside of 22 percent.
Over the past year, Balkrishna Industries shares have climbed 30 percent. In comparison, the domestic benchmark Nifty 50 has gained about 23 percent during the same time period.
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