Motilal Oswal's research report on Balkrishna Industries
BIL’s 4QFY23 performance was operationally in line. Moderating RM and freight cost led to 210bp QoQ improvement in EBITDA margin to 21.3%. While RM and freight costs are likely to see further moderation in FY24, we expect BIL to partially pass on the benefits, resulting in declining realizations in the coming quarters. We roll forward our valuation to June’25E EPS valuing BIL with a target price of INR2,100 ascribing it 22x (in line with 5 years LPA).
Outlook
Current valuations fairly reflect its industry-leading margin, FCF, and capital efficiencies. The stock currently trades at a P/E multiple of 28x/24.8x FY24E/FY25E EPS. We reiterate our Neutral stance on the stock.
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