Balkrishna Industries

Q1FY25 Concall Summary

Business Updates

• The demand trends were healthy during the quarter but the growth in the quarter is also due to the lower base in the same quarter last year
• The environment in USA should remain tepid due to recessionary heawinds but the company should achieve minor volume growth in USA in FY25
• The tyre deliveries to European Union should confirm to new guidelines on deforestation on source of natural rubber from 31st December 2024
• The advanced carbon black project with capacity of 30000 MT is progressing as per schedule and the moulds plant is also progressing as per schedule
• The company will spends Rs 1300 crores in Bhuj to add capacity for OTR tyres of 35000 MT and this capex will be executed in phases

Participants

Nomura

Nuvama Wealth

Anand Rathi Institutional Equities

Equirus Securities

Ambit Capital

Incred Equities

Kotak Mahindra AMC

QnA

• The freight costs was lesser as the rates had been negotiated early but in the coming quarters the price of freight and RM both will be higher
• As of now there has not been any price hike and going forward demand seems weak so will wait before taking a decision on price hike
• The end user demand seems weak due to the various macro economic and geo political challenges persisting in the current environment
• The capex for FY25 will be between Rs 600-700 crores
• The channel inventories are also higher because of ongoing crisis in Red Sea due to which distributors have stocked up higher
• The acceptance for the 48 inch plus tires which are used in mining segment has been good and hence the new capex is primarily in the mining segment tires for radial tires
• The market share shall be maintained
• The sourcing of rubber should be from land where all local laws are being followed and has also not led to any deforestation since 2020
• The cost of rubber that is ethically sourced is costlier by around $300/MT and exports to European Union need to adhere to this sourcing