Reduce Balkrishna Industries; target of Rs 2768: KR Choksey

KR Choksey's research report on Balkrishna Industries

BIL’s Q2FY25 earnings performance exceeds our estimates across the board. For Q2FY25, BIL reported revenue of INR 24,197 Mn (+7.4% YoY/ -10.9% QoQ), which outperformed our estimates by 4.0%. In Q2FY25, EBITDA grew by 8.8% YoY/ (-12.7% QoQ) to INR 5,798 Mn, which beat our estimate on higher gross margins and favorable operating leverage. PAT for the quarter was at INR 3,469 Mn (-0.1% YoY/ -29.3% QoQ), which is largely in line with our estimate. We lower our FY25 EPS estimates by 2.1%, mainly because the management has indicated flat volume growth for the year. However, for FY26E, we are maintaining our EPS projections, as we expect stronger pricing power and the delay in the EUDR policy to support our estimates.

Outlook

We maintain our P/E multiple of 26.5x to FY26E EPS of INR 104.4 to arrive at a price target of INR 2,768/share (maintained). Given the downside potential of 4.6% from CMP, we maintain our "REDUCE" rating on Balkrishna Industries' shares.

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