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Balkrishna Q1FY22 Result Analysis

Balkrishna Q1FY22 Result Analysis

Published on 12 August 2021 Views 91 Comments 0

Q1FY22 results

  • The revenue for Q1FY22 stood at Rs. 1,803 crores, a growth of 91.2% YoY. The revenue increase by 2.9% on a QoQ basis.
  • Operating profit stood at Rs. 593 crores. The operating profit increased by 114.1% YoY and suffered a decline of (-3.1%).
  • The operating margins in Q1FY22 were 33%, an increase of 400 bps when compared to the operating profit margin of 29% during Q1FY21. The operating margins were down by (-200) bps on a QoQ basis.
  • The operating margins declined due to higher logistics costs.
  • Profit before tax stood at Rs. 484 crores, an increase by almost 181% when compared to the PBT of Q1FY21. PBT declined by (-3.8%) on a QoQ basis.
  • The company registered a PAT of Rs. 331 crores. The PAT suffered a decline of (-12.9%) when compared to Q4FY21 PAT of Rs. 380 crores. PAT has improved by 150.8% on a YoY basis.

Business Highlights

  • First interim dividend of Rs. 4/share for FY22. has been declared by the company.
  • Q1FY22 was supported by strong tailwinds in demand across its geographies and segments. The company registered its highest ever volumes too.
  • Volumes grew by 1% QoQ basis and 80% on YoY basis. The volumes in Q1FY22 stood at 68.6 kt. This was the highest ever quarterly sales volume by the company.
  • For FY22, the volume guidance by the management remains at 250kt-260kt. The COVID led uncertainty has caused management to be conservative on guidance of volumes.
  • The company has taken a 2%-3% price hike in July 21. The company aims to take quarterly price hikes and also keep operating margins at 28%-30% on long term basis.
  • The dealer inventory has come to normal levels at 35-40 days as compared to 20-25 days earlier.
  • The company has guided at Rs. 900-1000 crores CAPEX for FY22.
  • The company currently is operating at its peak capacities. The maximum production which can be done is at 285kt per year in its current capacity.
  • The company believes that the raw material costs have rose to its peak and could remain at these levels.
  • The company has a market share of 5.5% in global specialty tyre segment. Excluding China, the same would be 7.5%. The growth rate in the segment currently is ~3.5% on annualized basis.
  • Performance of Indian business was subdued to due lockdowns and seasonality factors. US sales have increased and now contribute 16.1% to total sales in Q1FY22 as management is focusing on the area.
  • Replacement channel continues to contribute to majority of the sales as it stands at 71.9% in Q1FY22.
  • Contribution of OTR has increased.
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