Why BKT Stock is up by 10% Today? Q4FY21 Result Analysis

Published on 17 May 2021
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Why BKT Stock is up by 10% Today? Q4FY21 Result Analysis

Balkrishna Industries Ltd. stock price surged up by 10% on the Single-Day trading session of Monday 17^th May 2021. What were the possible reasons behind this surge in stock price? What should shareholders do? And, How was the quarterly result for the Balkrishna Industries? Get answers to all of these questions in this blog.

Q4FY21 Results:

Volume increased to 68,002 MT in FY21 as compared to 57,966 MT in Q4FY20. A growth of 17% YoY. The company achieved the highest ever quarterly sales volume.
Total income stood rose by 26% to Rs. 1,750 crore in Q4FY21 from Rs. 1,389 in Q4FY20.
EBITDA for the company stood at Rs. 558 crore in Q4FY21. A growth of 37% from Q4FY20 EBITDA of Rs. 407 crore. EBITDA margin in Q4FY21 was at 31.9% as compared to 29.3% in Q4FY20.
PAT for Q4FY21 was Rs. 372 crore as compared to Q4FY20 PAT for Rs. 18.5%. PAT margin in Q4FY21 was 21.3% when compared to Q4FY20 PAT margin of 18.5%.

FY21 Results:

Volume increased to 2,27,131 MT in FY21 as compared to 2,01,760 MT in FY20. A growth of 13%.
Total income stood rose by 17% to Rs. 5,740 crore in FY21 from Rs. 4,898 in FY20.
EBITDA for the company stood at Rs. 1,810 crore in FY21. A growth of 31% from FY20 EBITDA of Rs. 1,381 crore. EBITDA margin in FY21 was at 31.5% as compared to 28.2% in FY20.
PAT for FY21 was Rs. 1,155 crore as compared to FY20 PAT for Rs. 945 crores. PAT margin in FY21 was 20.1% when compared to FY20 PAT margin of 19.3%.
The company is long-term debt-free. The company has cash and cash equivalents of Rs. 1,475 crore as of 31^st Mar 2021.

Geographic Dependency:

The company is having a dependency on Indian Regions of around 20%-25%.
While the majority of the dependency is on the developed market like Europe and US Market.
BKT is having a niche off-the-road product portfolio.
All over the globe, the company is having a market share of around 4%-5% whereas the company eyes to achieve market share in double digits of over 10%.
With this vision of the company, growth of the company can go above the mark of 20% with the availability of the normal demand in the market plus vision of doubling of the market share.

Capacity:

The current capacity of the company is 2.85 Lakh Metric Tonne.
In FY21, the capacity utilization was around 2.27 lakh metric tonne, same is up by 12% from the last year.
In FY22, management has given guidance of an increase in capacity utilization of around 13%-15% which will be in between the range of 2,50,000 MT – 2,60,000 MT.
The Company is trying to achieve around 3.35 Lakh metric tonne capacity by H2FY23.
As per this plan the company may go with the Capex Plan of Rs. 800- Rs. 1000 Cr. every year to achieve the desired capacity target of 3.35 Lakh Metric Tonne.

Management Commentary:

There was robust demand in the agriculture segment across geographies in which the company operates its businesses.
The other segments had an uptick due to an increase in commodity prices, pickup in economic activity, and infrastructure creation.
There were multiple challenges in raw material & its availability in FY21. Also, the company faced supply chain issues post-Suez Canal Fiasco.
BKT overcame such challenges and posted the highest-ever annual sales volume.

Valuation:

Balkrishna Industries is currently trading at a PE Ratio of around 37 (17/05/2021).
The Median PE Ratio of the company is 29.36.
The 3-Year Median PE Ratio of the company is 25.6 and the 5-Year Median PE of the company also hovers around 24-25.
The above Median PE ratio of the stock shows that the company is trading at a high premium valuation as of now.

Dividend

The Board of Directors recommended a final dividend of Rs. 5 per share subject to shareholder approval at the ensuing AGM.
The company also paid Rs. 12 per share in 9MFY21. Hence, the total dividend will be Rs. 17 per share. This takes a dividend payout ratio of 28%.

Conclusion:

At this point or in the near time, Time or Price Correction can take place in this stock, and hence long-term investors of this stock should hold and ignore the noise. The stock is currently trading a high premium valuation, where any type of correction is quite possible. Here, a long-term investor or shareholder should have a long-term view of the company as the company looks for gaining more market share, Capex plans, and many other factors. Do proper research and study before investing.