Balkrishna Industries - Weakest Month Of OHT Exports Since Destocking Started A Year Back: ICICI Securities

ICICI Securities Report

Weakness in off-highway tyres exports from India intensified in June 2023 and touched their lowest in past two years, down 30% YoY to $122 million. This was due to continued weak demand, impact of cyclone in Gujarat and deflationary pricing.

A week’s production loss from the leader with an average market share of 50%, implies overall exports got hit by ~12.5% -- adjusted for which, it was largely in line with past six-month average export level.

We expect a favorable base for OHT exports to start H2 FY24 onward other than partial balancing effect of June-23 production loss in Q2, implying largely flattish Q2 sequentially.

Balkrishna Industries Ltd.’s share within India OHT exports was at ~44%, down 900 basis points QoQ, as bulk of its production happens in Gujarat, the centre stage of the cyclone.

We retain 'Add' on Balkrishna Industries, with a discounted cash flow-based price target of Rs 2,577, implying 26 times FY25E earnings per share.

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