BALKRISIND - Balkrishna Inds

📊 NSE: BALKRISIND 🏢 Tyres 📅 Last Updated: 12/13/2025 18:59

💰 Financial Performance

Revenue Growth by Segment

The primary segment is Off-Highway Tires (OHT), which saw a standalone revenue of INR 2,320 Cr in Q2 FY26, a decline of 6% YoY. For H1 FY26, standalone revenue was INR 5,079 Cr, a marginal decline of 2% YoY. The company is expanding into the Truck & Bus Radial (TBR) segment with a revenue target of INR 5,000 Cr by 2030.

Geographic Revenue Split

The company reported lower sales volumes in the American market during Q2 FY26, while India sales saw an increase. Historically, the company derives a significant portion of its revenue from exports to Europe and North America, though specific percentage splits per region for the current quarter were not explicitly detailed beyond the trend of shifting mix.

Profitability Margins

Gross profit for FY25 was INR 2,829.82 Cr on a standalone basis. Net profit for Q2 FY26 was INR 265 Cr, down 24% YoY from INR 350 Cr. H1 FY26 PAT stood at INR 552 Cr, a 33% YoY decline from INR 827 Cr. PAT margin compressed from 15.9% in H1 FY25 to 10.9% in H1 FY26.

EBITDA Margin

EBITDA margin for Q2 FY26 was 21.5%, a decline of 358 bps from 25.1% in Q2 FY25. H1 FY26 EBITDA margin was 22.7% compared to 25.6% in H1 FY25. The decline is attributed to higher logistics costs, product mix shifts toward India, and partial absorption of US tariffs.

Capital Expenditure

Capex spend for H1 FY26 was approximately INR 1,737 Cr. The company plans annual maintenance and expansion capex of INR 1,100-1,300 Cr over the medium term, primarily funded through internal accruals.

Credit Rating & Borrowing

The company maintains a robust financial profile with a 'Stable' outlook from rating agencies. As of September 30, 2025, gross debt stood at INR 3,615 Cr. The company successfully repaid INR 500 Cr of Non-Convertible Debentures (NCDs) by April 2025.

⚙️ Operational Drivers

Raw Materials

Key raw materials include natural rubber, synthetic rubber, and carbon black. Raw materials account for approximately 70% of the total production cost.

Import Sources

Raw materials like natural rubber are sourced globally, while synthetic rubber and carbon black are linked to crude oil derivatives. Specific countries were not listed, but the company noted inventory build-up to comply with EUDR (European Union Deforestation Regulation) requirements.

Capacity Expansion

Sales volume for H1 FY26 was 150,916 MT, a 4% YoY de-growth. The company is currently executing capacity expansion projects for the TBR segment to achieve a 7-8% market share by 2030.

Raw Material Costs

Raw material costs are highly volatile; a lag in passing on these costs led to a margin dip to 20% in FY23. The company uses backward integration into carbon black to mitigate cost pressures and improve operating efficiency.

Manufacturing Efficiency

Efficiency is driven by 'Large Variety - Low Volume' segment specialization, allowing for agility and customization. Captive power and carbon black integration support industry-leading margins compared to peers.

Logistics & Distribution

Logistics costs have been impacted by geopolitical tensions; realized foreign exchange losses pertaining to sales were INR 68 Cr in Q2 FY26.

📈 Strategic Growth

Expected Growth Rate

17%

Growth Strategy

Growth is targeted through the Truck & Bus Radial (TBR) segment aiming for INR 5,000 Cr revenue by 2030. The strategy involves leveraging the existing distribution network, expanding the product portfolio beyond the current 3,200 SKUs, and increasing market share in the global OHT market from the current 5-6%.

Products & Services

Off-Highway Tires (OHT) for agricultural, construction, industrial, earthmoving, port, mining, ATV, and gardening applications. Also producing Truck & Bus Radial (TBR) tires.

Brand Portfolio

BKT

New Products/Services

Expansion into the TBR (Truck & Bus Radial) market is the primary new product focus, with a target to reach 7-8% market share in the midterm.

Market Expansion

Targeting increased penetration in the Indian domestic market and maintaining a 20%+ market share in the global agricultural tire segment.

Market Share & Ranking

Holds a 5-6% global market share in the specialty Off-Highway Tire market and over 20% in the agricultural tire segment.

🌍 External Factors

Industry Trends

The industry is shifting toward sustainable sourcing (EUDR) and increased radialization in emerging markets. BKT is positioning itself by expanding its radial capacity and building compliant raw material inventories.

Competitive Landscape

Competes with global tire majors in the OHT segment. BKT's competitive edge is its ability to service small, niche order lots that larger players often ignore.

Competitive Moat

The moat is built on a low-cost manufacturing base in India, a massive portfolio of 3,200+ SKUs that competitors find difficult to replicate in low volumes, and deep backward integration into carbon black.

Macro Economic Sensitivity

Highly sensitive to global agricultural and mining cycles. A slowdown in European or American construction/agri sectors directly impacts export volumes.

Consumer Behavior

Growing demand for specialized tires for high-capacity mining and precision farming equipment is driving the need for more complex radial tire designs.

Geopolitical Risks

Major risks include the 50% US tariff on OHT imports and the EUDR compliance requirements which could restrict market access if sustainability standards are not met.

⚖️ Regulatory & Governance

Industry Regulations

Subject to US import tariffs (increased to 50% in Aug 2025) and EUDR regulations regarding the traceability of natural rubber to ensure no deforestation.

Environmental Compliance

The company spent INR 21.52 Cr on CSR projects in FY25 and is building inventory to comply with the EUDR (European Union Deforestation Regulation) effective Jan 2026.

Taxation Policy Impact

Standalone tax provision for FY25 was INR 472.83 Cr. The effective tax rate for H1 FY26 was approximately 25.3%.

⚠️ Risk Analysis

Key Uncertainties

Volatility in natural rubber prices and crude-linked inputs could impact margins by 3-5% if not passed through. Geopolitical trade barriers (tariffs) remain a primary uncertainty.

Geographic Concentration Risk

Significant revenue concentration in Europe and North America makes the company vulnerable to regional economic downturns or trade policy changes in those zones.