Tyre stocks in focus; Balkrishna Industries hits new high
Balkrishna Industries (BIL), TVS Srichakra, Goodyear India, Ceat, Apollo Tyres and MRF were up between 2% and 7% on the BSE. On comparison, the S&P BSE Sensex was down 0.19% at 32,878at 11:51 AM.
BIL hit a new high of Rs 2,242, up 8% on the BSE in intra-day trade. The stock soared 25% in past one week after its board recommended bonus issue in the ratio of 1:1 i.e. 1 bonus share for every 1 share held. The board also declared 2nd interim dividend of Rs 2.50 per equity share in addition to Rs 2.50 per equity share declared in Q1FY18.
BIL reported a better-than-expected net profit at Rs 203 and revenue of Rs 1,114 crore for the quarter ended September 2017 (Q2FY18). It has recorded highest ever quarterly volume at 49,331 MT, a growth of 15.9% YoY, against analyst estimate of 11%.
“Given the recovery in global economy, we expect volume growth to be in double digits for the coming quarters. It is noteworthy that second half (2H) is much stronger for BIL versus 1H and consequently 2HFY18 growth numbers should also be strong,” analysts at Nirmal Bang said in result update.
Further, soft rubber prices helped the company to report a strong margin in excess of 30%, which is likely to continue given the recent correction in rubber prices.
Rubber prices corrected sharply from their peak in March 2017 quarter, which should drive margin expansion in the coming quarters. The management, in an interaction, indicated that it is able to pass on any rise in commodity costs to customers, given the relatively stable pricing scenario in OEM and replacement markets, added report.