ICICI Securities: Balkrishna Industries - Industry Growth Revival Drives Upgrade 
Vredestein branded automobile tyres sit stacked in a storage area at the Apollo Tyres Hungary Kft plant in Gyongyoshalasz, Hungary. (Photographer: Akos Stiller/Bloomberg)  

ICICI Securities: Balkrishna Industries - Industry Growth Revival Drives Upgrade 

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ICICI Securities Report

Balkrishna Industries Ltd. continues to be remain one of our of high conviction ideas within I-Sec auto coverage universe. Yes, the stock has appreciated approximately 70% from its March 20 lows yet we believe it provides better risk reward vis-a-vis peers due to its standout earnings strength (expect FY21 to grow 3% YoY). The industry exports data has provided new insights which renew our confidence on growth rebound in H2 FY21. The latest monthly (June 20) industry export data indicates Vshaped rebound across agri tyres (Ag) at approximately 44% YoY / 32% MoM and off the road tyres (OTR) at -2.4% YoY / approximately 29% MoM.

We were slightly concerned post Q4 FY20 about the flat volume guidance for FY21 amidst the weak environment; however, these data points alleviate our near term growth concerns. We model in 0%/15% volume growth in FY21/FY22, approximately 18% earning per share (EPS)compound annual growth rate (CAGR) (FY20-22). We upgrade to Buy.

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ICICI Securities Balkrishna Industries Update.pdf


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