Balkrishna Industries Ltd. – Niche Tyremaker
Balkrishna Industries Limited (BKT) started its Off-Highway Tyre business in 1987. For over 30 years, BKT has successfully focused on specialist segments such as agricultural, construction, and industrial as well as earthmoving, port and mining, ATV, and gardening applications.
The company sells its Tyres in 160+ countries through its distribution network in the Americas, Europe, India & ROW. The company has been undertaking various actions like setting up warehouses in markets in North America and Europe to be closer to the customer and have a just-in-time (JIT) system.
BIL also has a strong partnership with OEMs. The company has over 2,700 SKUs. The company currently has four manufacturing units in India, an overall achievable capacity of 2,85,000 metric tonnes (MT) per annum, and a sales distribution network spread across 160 countries.
We believe the company will continue to perform well over the next few quarters due to the robust demand environment. We believe that the company’s export-oriented business model, labor cost benefits, and aggressive marketing may help it outperform its peers. Hence, we recommend a BUY rating in the stock with the target price (TP) of Rs.2260, 23x FY24E EPS.