Balkrishna Industries - QoQ Volume Decline Seems Limited At ~5-6%: ICICI Securities
Balkrishna Industries has been gaining share within OHT exports out of India and is at ~60% of H1 FY23.
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ICICI Securities Report
Our analysis suggests ~5-6% QoQ decline in volume for Balkrishna Industries Ltd., implying ~74-75,000 tonne sales in Q3 FY23 versus ~79,000 tonne in Q2 FY23.
Off highway tyre industry exports data out of India till November 2022 suggests continued strength in off the road segment, driven by U.S. and rest of world versus continued weakness in agricultural category, still down ~20% from its Q1 FY23 levels.
Going by seasonally stronger dispatches in December, we expect ~7-8% QoQ value decline for India OHT exports, implying ~5-6% volume decline, as partial price cuts were expected following a decline in raw material basket cost.
Europe continued to be the weak link for India OHT exports, down ~22% YoY versus U.S. growing ~16% YoY. OHT exports revenue year-to-date is up 11%, with agricultural segment being up 7% YoY versus OTRs being up 19% YoY, with growth assumption of ~16% compound annual growth rate over FY22-FY24E (~9% volume CAGR).
For Balkrishna Industries, we maintain our FY23 volume growth estimate of ~8% YoY, implying 150,000 tonne sales volume in H2 FY23 versus 162,000 tonne in H1 FY23.
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