Hold Balkrishna Industries; target of Rs 2163: Sharekhan

Sharekhan's research report on Balkrishna Industries

Q2FY2023 results were above expectations, led by better-than-expected volume growth, partially offset by RM headwinds. EBITDA margin is expected to remain under pressure, driven by unfavourable product mix and increased other operating costs. Well geographically diversified portfolio, timely execution of capex plans, market share gains, and entry into new markets continue to drive double-digit revenue growth going forward, despite headwinds in European business.

Outlook

We maintain our Hold rating on Balkrishna Industries Limited (BKT), with a 12-month PT of Rs. 2,163 due to concerns over Europe’s crop yield and production and expensive valuations. The stock trades at a P/E multiple of 22.9x and EV/EBITDA multiple of 16.6x its FY2024E estimates.