Balkrishna Industries - Continues To Outperform Industry Exports: ICICI Securities

ICICI Securities Report

Balkrishna Industries Ltd. has reported strong demand trends in its key overseas markets with overall Q2 FY23 exports revenue being up 25% YoY (in U.S. dollar terms) against industry exports being up 5% YoY.

The data indicates growth momentum in off-the-road segment exports (up 10% YoY) and steady agri demand (up ~3% YoY) despite adverse market conditions in target geographies and supply-chain issues.

Data continues to support robust demand momentum driven by both agri and OTR segments (H1 FY23 industry exports in U.S. dollar are up ~16% YoY), on a strong base of H1 FY22.

Regionally, growth in Q2 FY23 was led by the U.S. market (up 55% YoY) followed by rest of world at 12% YoY.

We believe the benefit of new contracts of containers at lower rates and lag effect of lower raw material costs could aid Balkrishna Industries Ebitda margin to revert towards 24-25% levels Q4 FY23 onwards, over and above delivering ~5% volume growth in FY23.

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