JK Tyre - Targeting Industry Outperformance In FY24E: Yes Securities

Yes Securities Report

We interacted with the management of JK Tyre and Industries Ltd. during our recent plant visit. The management reiterated revenues growth outperformance in FY24E as it anticipates revenue growth of 15-20% (versus high single digit growth as indicated by peers).

JK Tyres indicated continued improvement in return ratios led by margins expansion (product, raw material and cost savings led) and moderate capex. Demand commentaries for domestic market remained mixed while it expects healthy exports in FY24E.

While maintaining leadership in truck-bus radial segment continued to be in focus, in line with industry it expects premiumisation within provision coverage ratio to drive growth with share of premium products would be 30-35%.

We believe, key factors for sustained industry profitability ahead to be watched out for are,

1. continued priced discipline,

2. raw material decline,

3. moderate capex and

4. all round recovery from the replacement volumes.

The continued re-rating for the tyre stocks is contingent upon sustenance of the above factors.

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