💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for FY25 stood at INR 14,693 Cr, representing a 2.06% decline from INR 15,002 Cr in FY24. Standalone sales for FY25 were INR 10,063 Cr compared to INR 10,211 Cr in FY24. Despite market headwinds, the company reported Q2 FY26 revenue of INR 4,026 Cr, maintaining a trajectory toward double-digit growth.

Geographic Revenue Split

JK Tyre exports to over 100 countries. In Q2 FY26, export revenue grew by 10% sequentially (QoQ) despite tariff-related challenges. The Mexico subsidiary, JK Tornel, and domestic subsidiary Cavendish Industries contributed significantly to the consolidated financials, though specific regional percentage splits were not disclosed.

Profitability Margins

Profitability saw compression in FY25 with Consolidated Profit After Tax (PAT) at INR 806 Cr, a slight decrease from INR 811 Cr in FY24. PAT for Q2 FY26 stood at INR 223 Cr, a 54% increase YoY. The decline in FY25 was primarily due to the inability to fully pass on raw material price hikes in the commercial vehicle segment.

EBITDA Margin

Consolidated PBILDT margin moderated to 10.3% in FY25 from 14% in FY24, a decline of 370 bps. In Q1 FY26, the margin improved by 73 bps QoQ to 10.4%. Management expects a further 100-150 bps improvement in FY26 driven by premiumisation and stable rubber prices.

Capital Expenditure

Debt levels are expected to peak in FY26 as the company completes its planned capacity expansion for Truck and Bus Radial (TBR), Passenger Car Radial (PCR), and All Steel Light Truck Radial (ASLTR). While specific total project cost in INR Cr was not explicitly totaled, the company raised INR 500 Cr via QIP in Dec 2023 and INR 240 Cr via CCDs for expansion activities.

Credit Rating & Borrowing

CareEdge reaffirmed ratings at IND AA-/Stable for long-term and IND A1+ for short-term facilities. Net debt stood at INR 4,201 Cr as of September 30, 2025, up from INR 3,862 Cr in June 2025 due to increased working capital needs. Net Debt/PBILDT was 3.53x in FY25 compared to 2.40x in FY24.

⚙️ Operational Drivers

Raw Materials

Key raw materials include natural rubber, which accounts for approximately 33.3% (one-third) of total raw material costs, and crude-linked derivatives such as carbon black and nylon cord.

Import Sources

Approximately 35-40% of raw material requirements are imported to meet production standards and volume needs, though specific country names were not disclosed in the provided text.

Capacity Expansion

The company is expanding capacities in TBR, PCR, and ASLTR segments, with completion expected by the end of FY26. Current consolidated capacity utilization was 88% in Q2 FY26, with radial capacity utilization exceeding 90%.

Raw Material Costs

Raw material price inflation, particularly in natural rubber, led to a 300+ bps decline in operating margins in FY25. The company uses a mix of inventory management and price hikes to manage these costs, though price pass-through was restricted in the CV segment post-elections.

Manufacturing Efficiency

Efficiency is driven by high capacity utilization (88% consolidated) and a focus on 'digital leadership' to optimize the mobility ecosystem. Operational efficiencies helped improve PBILDT from 9% in 2020 to 14% in FY24.

Logistics & Distribution

The company maintains a wide marketing and distribution network across India and exports to over 100 countries, though specific logistics costs as a % of revenue were not provided.

📈 Strategic Growth

Expected Growth Rate

10%

Growth Strategy

Growth will be achieved through a double-digit revenue guidance driven by a 'premiumisation' strategy (increasing the share of high-margin products), the ramp-up of new margin-accretive capacities in H2 FY26 (TBR, PCR, ASLTR), and sustained marketing efforts in both domestic and international markets.

Products & Services

Truck and Bus Radial (TBR) tyres, Passenger Car Radial (PCR) tyres, All Steel Light Truck Radial (ASLTR) tyres, and Commercial Vehicle (CV) tyres.

Brand Portfolio

JK Tyre, Cavendish, and JK Tornel (Mexico).

New Products/Services

Focus on margin-accretive new capacities in ASLTR and premium PCR segments; specific revenue contribution % for new launches was not disclosed.

Market Expansion

Expansion of the premium portfolio and increasing market share in the passenger tyre segment. The Mexico subsidiary (JK Tornel) is a key pillar for international growth.

Market Share & Ranking

JK Tyre holds a leadership position in the domestic Truck and Bus Radial (TBR) segment.

Strategic Alliances

The company is undergoing a scheme of amalgamation with its subsidiary, Cavendish Industries Limited (CIL), to streamline operations.

🌍 External Factors

Industry Trends

The industry is shifting toward radialization and premiumisation. JK Tyre is positioning itself with >90% radial capacity utilization and expanding ASLTR capacities to meet evolving mobility needs.

Competitive Landscape

The industry is highly competitive with volatile input prices. JK Tyre competes by focusing on operational efficiency and a premium product mix.

Competitive Moat

The moat is built on a leadership position in the TBR segment, a strong brand, and an extensive distribution network. This is sustainable due to high entry barriers in tyre manufacturing and established OEM relationships.

Macro Economic Sensitivity

Revenues are highly sensitive to the cyclicality of the automotive industry and GDP growth, particularly affecting the commercial vehicle segment which saw subdued demand post-elections.

Consumer Behavior

There is an increasing consumer preference for premium tyres and a shift toward radial tyres in the light truck segment.

Geopolitical Risks

The present geopolitical landscape presents risks due to the industry's deep integration with the global economy and reliance on imported raw materials.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental regulations regarding carbon emissions and health/safety standards due to the energy-intensive nature of tyre manufacturing.

Environmental Compliance

The company has adopted a 6 'R' strategy for sustainability. Specific compliance costs in INR were not disclosed.

Taxation Policy Impact

The consolidated provision for tax was INR 400 Cr in FY25 on a Profit Before Tax of INR 1,211 Cr, implying an effective tax rate of approximately 33%.

Legal Contingencies

The company received a certificate stating no directors have been debarred by SEBI or MCA. No specific pending court case values in INR were disclosed in the provided text.

⚠️ Risk Analysis

Key Uncertainties

Volatility in raw material prices (natural rubber and crude) is the primary uncertainty, with a potential to swing PBILDT margins between 8% and 15% based on historical trends.

Geographic Concentration Risk

While global, the company has significant exposure to the Indian market and Mexico (via JK Tornel).

Third Party Dependencies

Dependency on natural rubber suppliers is high, as it constitutes 1/3 of raw material costs.

Technology Obsolescence Risk

The company is mitigating technology risks through 'digital leadership' and R&D in radial technology and green manufacturing.

Credit & Counterparty Risk

Receivables and inventory are managed through strict controls; liquidity is considered 'Adequate' with cash and bank balances of INR 755 Cr as of March 2024.