Buy JK Tyre; target of Rs 700: Emkay Global Financial

Emkay Global Financial's research report on JK Tyre

We hosted the management of JK Tyre (JKI), represented by Anuj Kathuria, President (India) and Sanjeev Aggarwal, CFO, for a series of investor meetings. JKI is accelerating focus on high-growth, high-margin PCR via well-timed capex (operating at ~95% utilization now), largely in high-margin SUV tyres, even as overall capex remains calibrated, thus driving further deleveraging. Consumers in both, commercial & passenger tyres, are increasingly looking at features besides only price (like mileage, comfort, safety, performance); in turn, this is driving gradual de-linking of margins to underlying commodities.

Outlook

We retain BUY on JKI, with unchanged TP of Rs700 at 15x FY26E PER; JKI remains undervalued despite the ongoing sharp improvement in performance across P&L/balance sheet/return ratios (trades at ~10x FY26E PER vs. ~14-15x peer average).

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