Target: ₹2,547
CMP: ₹2,192.20
Balkrishna Industries is a Mumbai-headquartered tyre company that manufactures and sells off highway tyres (OHT) to the earthmoving, mining, agriculture and gardening segments.
In Q4FY26, its consolidated revenue rose 6.6 per cent year on year to ₹2,933 crore, aided by 5 per cent growth in sales volume to 85,820 mt. EBITDA grew 4.3 per cent to ₹640 crore in Q4FY26 because of the higher topline. However, EBITDA margin narrowed 50 bps to 21.8 per cent as raw material expenses (+11.6 per cent) and other expenses (+18.9 per cent) rose.
Reported profit after tax (PAT) declined 18.7 per cent to ₹299 crore due to adverse movement in other income. The company’s capital expenditure (capex) estimate for FY27 is ₹1,500-1,800 crore, along with an annual maintenance cost of about ₹200 crore.
The company’s performance in Q4FY26 reinforces confidence in the resilience of its core OHT franchise, with recovery visible in key overseas markets and continued strength in India, supporting a healthier volume outlook. While near-term earnings trajectory may be tempered by rising raw material prices, higher freight expenses and supply chain disruption linked to the geopolitical environment, these pressures appear manageable, with pricing actions expected to gradually offset the impact. Hence, we upgrade our rating on the stock to Buy, with a rolled-forward target price of ₹2,547, based on 26x FY28E adjusted EPS.