Balkrishna Industries Q2 Results Review - Macro Headwinds Persists: Systematix
Management indicated demand visibility is a challenge in the existing macro environment.
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Systematix Research Report
Balkrishna Industries Ltd.'s Q2 FY23 operating performance came 9% above consensus and our estimates, as net pricing surprised positively.
Ebitda margin at 19.5% (down 20 basis points QoQ) continues to remain under pressure from higher raw material costs and ocean freights.
On the concall, management indicated demand visibility is a challenge in the existing macro environment. The company has, thus, realigned its capex plans and plans to increase capacity judiciously.
Balkrishna Industries' balance sheet remains stretched due to higher receivables and inventory as lead time for exports have increased.
We maintain our cautious stance as volumes hover close to cyclical peak post robust performance (11% compound annual growth rate over FY17-22), and we expect growth to moderate in the medium term.
Further, the Ebitda margin should settle at a lower level than the previous peak of 28-30%.
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