On Friday, Balkrishna Industries Ltd. (BSE:BIL) received an upgrade in its stock rating by ICICI Securities from Hold to Add, with a maintained price target of INR 3,200.00.
The upgrade comes despite a report noting India's off-highway tire (OHT) exports in June 2024 stood at $140 million, which was a 14% year-over-year increase but still below the trailing 12-month average of $146 million. The noted shortfall was attributed to a dip in retail demand from end markets and a buildup of inventory in recent months, which affected wholesale dispatch.
The agricultural and off-the-road (OTR) tire segments saw varied growth, with exports rising approximately 11% and 21% year-over-year, respectively. The European Union experienced a notable increase in these segments, with agricultural and OTR exports up 24% and 27% year-over-year. The United States reported flat growth in agricultural tire exports and an 8% increase in the OTR segment. For the rest of the world, exports increased by 7% year-over-year.
Balkrishna Industries' share of India's OHT exports decreased from about 62% in the fourth quarter of the fiscal year 2024 to approximately 52% in the first quarter of the fiscal year 2025. This shift brings the company's market share closer to its long-term average levels. Despite the changes in market share and export dynamics, ICICI Securities has kept its estimates for Balkrishna Industries unchanged.
The rationale behind the upgrade to Add status, as per the analyst's comments, is driven by a roughly 10% decline in the stock's price over the past month. The price target is based on a discounted cash flow (DCF) method and implies a multiple of 26 times the forecasted earnings per share (EPS) for the fiscal year 2026.
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