The management of Balkrishna Industries declined to provide volume growth estimates for FY25 since geopolitical tensions continue to cast doubt on the prospects for demand.
Early on May 21, shares of Balkrishna Industries jumped 8% to a new 52-week high. The stock maintained its gains from the previous trading day following the release of better-than-expected Q4 earnings.
The tyre maker announced a staggering 87.4% increase in net profit, reaching Rs 486.8 crore from Rs 260 crore during the same time last year.
Strong revenue growth was also seen in the fourth quarter, with revenues of Rs 2,682 crore, up 16% from the same period in the previous fiscal year.
As of 9.40 am, the company’s shares were trading at Rs 2,996.8 per share on the NSE, up 7.1 percent from the closing price of the previous session.
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With an estimated 15% gain, international brokerage Nomura raised its rating for Balkrishna Industries to buy, with a target price of Rs 3,230 per share.
According to the brokerage, the company is about to embark on a demand upcycle, given that rivals globally are also expected to witness a recovery in H2FY25. Nomura predicted that price increases will sustain margins in the future and that Balkrishna Industries’ robust growth momentum will likely continue.
Although Motilal Oswal reported that the company’s results for the quarter ending in March considerably above its projections, the brokerage maintained its neutral rating and raised its price target to Rs 2,535.
There is currently a surge in retail demand in important international markets, and demand in India is still strong. The management did not, however, provide any volume growth guidance for FY25 because of the ongoing geopolitical concerns, which continue to cast doubt on the demand picture in important markets.
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Citi and Kotak Institutional Equities, on the other hand, maintained their sell recommendations.
Kotak pointed out that because of the continuous global unrest, the company’s near-term picture is still uncertain. Shipments may be delayed as a result, thus putting pressure on profits.
Additionally, valuations are looking expensive to the domestic brokerage. Kotak has a target of Rs 2,175 per share, indicating a potential downside of 22 percent.
Over the past year, Balkrishna Industries shares have climbed 30 percent. In comparison, the domestic benchmark Nifty 50 has gained about 23 percent during the same time period.
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