Balkrishna Industries share has doubled investors' wealth in nearly 6.5 months. An investment of Rs 1 lakh in this stock on March 23 this year would have turned to Rs 2.04 lakh today. On March 23, the stock fell to Rs 700 on BSE on a day when Sensex and Nifty logged their highest losses ever amid rising number of coronavirus cases in India and the resultant lockdown in a majority of states.
While Sensex lost 3,934 points to 25,981 , Nifty closed 1,135 points lower at 7,610.
The stock slipped from Rs 1,277 on February 17 to Rs 700 on March 23 as weakening sentiment arising out of coronavirus crisis hit the stock of the tyre manufacturer.
It has rebounded 105% since then. The share stood at Rs 1,434 today. Returns from Balkrishna Industries share have outperformed its sectoral peers since March 23. While MRF and Apollo Tyres managed a gain of 15.76 % and 75% since March 23, shares of Ceat and Goodyear India delivered returns of 60% and 70% respectively.
Balkrishna Industries share has delivered 92.55% returns during the last one year against 5% return generated by Sensex during the same period. The share has gained 44.72% since the beginning of this year.
In a month, the share has gained 11%. The share stands higher than 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages.
The stock closed 1.17% lower at Rs 1434 against previous close of Rs 1451 on BSE today. Market cap of the firm fell to Rs 27,721 crore.
Brokerages are bullish on the prospects of the firm in the stock market which is among the most efficient tyre producers in India.
On October 1, Sharekhan gave a buy call on the stock with a target price of Rs 1,770.
The brokerage said, "Given the strong pickup in demand in July and August, BKT is likely to improve its earlier guidance of flat volume growth in FY2021; favourable currency movement and operating leverage would drive margin expansion. BKT is expected to continue outpacing the industry, driven by new product introduction, enhanced distribution network, and increased OEM business; BKT aims to double its global market share to 10%. We have raised our earnings estimates and rollover our multiple to FY2023 earnings. BKT has amongst the best financial metrices in the tyre industry with debt free at net level, robust return rations, and FCFF yield. BKT remains our preferred pick in the automotive space. The company is expected to deliver strong 17% CAGR over FY20-23 period."
On September 21, 2020, ICICI Direct gave a buy rating to the stock of Balkrishna Industries with a target price of Rs 1415.
ICICI Securities too has given buy rating to Balkrishna Industries stock with a target price of Rs 1671. The brokerage expects future cash flow generation to be strong at Rs1400 crore (5.3% FCF yield) in FY22E. We value the stock at an unchanged multiple of 22 times Sep'22E EPS of Rs 76 to arrive at the target price of Rs 1,671 (earlier Rs 1,514).
However, Q1 earnings of the firm were affected by the lockdown announced by the government to contain rising cases of coronavirus pandemic.
For the quarter ended June, the company reported a consolidated sales of Rs 942.61 crore, down 31.31 % from Rs 1372 crore in last quarter. It fell 21.38% on an year on year basis.
Net profit fell 25.61% to Rs 131.56 crore in Q1 against Rs 176.84 crore in the corresponding quarter of previous fiscal.
The firm is a leading manufacturer of off-highway tyres, which are used in agricultural, industrial, material handling, construction, earthmoving, forestry, lawn and garden equipment and all-terrain vehicles aIt serves both original equipment manufacturers (OEM) and the replacement market.
It has four subsidiaries in Europe and North America and sells products in 130 countries worldwide. In India, it has five production sites in Aurangabad, Bhiwadi, Chopanki, Dombivali and Bhuj.