Multibagger stock: Up 1,360% in 10 years! ICICI Securities sees further upside in this midcap stock

Shares of Mumbai-based Balkrishna Industries Limited (BIL) have delivered multibagger returns to its long-term shareholders as the stock has zoomed over 1,360 per cent in the last 10 years. It has corrected over 19 per cent from its 52-week high of Rs 2,451 and is up 10 over per cent from its 52-week low of Rs 1,801.

ICICI Securities, in its recent report, said BIL’s revenue share within India off-highway tyre (OHT) exports will return to 50 per cent in a couple of quarters, post full reversing of the inventory situation at distributor-end to steady-state.

Balkrishna Industries is engaged in offering pneumatic tires. The company offers tires, tubes and tire flaps and focuses on the manufacture of a range of off-highway tires (OHT). These tires are mainly meant for agricultural, industrial and construction, earthmover and port, mining, forestry, lawn and garden and all-terrain vehicles (ATV).

Its products include AGRIMAX RT 855, PL 801, EARTHMAX SR 41, EM 934, AGRIMAX TERIS and EARTHMAX SR 30, among others.

"From the low of US$130 million in Oct’22, India’s OHT exports revived to US$152 million in Dec’22, with the bulk of the revival being driven by the agri segment tyres," ICICI Securities added.

Though December is a seasonally strong month for OHT exports, the brokerage believes the Dec’22 figure included a 7-8% deflationary impact of declining RMB and container rates. Though the destocking exercise is likely to persist for another quarter, it said industry volumes bottomed out in Oct’22 itself and are set to improve amid steady demand gradually.

ICICI Securities expects the first half of FY24 to be impacted by the elevated base of H1FY23, the deflationary effect on realisation, and recessionary fears in key markets (which would depress OTR demand). It has a 'Buy' rating on the stock with a target price of Rs 2,378 per share.

The off-highway tyre maker posted a 68 per cent fall in net profit for the quarter ended December 2022. The company recorded a net profit of Rs 108.38 crore compared to Rs 338.95 crore in the third quarter of FY22.

Revenue from operations of the firm climbed 6 per cent to Rs 2165.57 crore for the quarter ended December 2022 as against Rs 2045.81 crore during the quarter ended September 2022. The firm also announced an interim dividend of Rs 4 per share.

“The Board has declared 3rd Interim dividend of Rs. 4.00 per Equity Share (200%) on the Equity Shares of Rs. 2/- each (face value) for the financial year 2022-23 and the payment thereof shall be credited/dispatched within 30 days from the date of declaration as per applicable provisions of Companies Act, 2013, to such shareholders as on Record Date i.e. 18th February 2023," said Balkrishna Industries in a stock exchange filing.

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