Balkrishna Industries: Margin outlook weighs on near term prospects

Balkrishna Industries: Volume constraints and valuations are the other concerns

The December quarter results of Balkrishna Industries, which makes tyres for the off-the-road or off highway segment, were a mixed bag with revenue outperformance offset by margin decline. Despite a price hike of 2-3 per cent in the quarter, the gross margins of the country’s largest listed tyre maker by market capitalisation, slipped by 620 basis points y-o-y to 53.5 per cent. Higher natural rubber cost, which gained about 6.4 per cent in the December quarter, was the key reason for the sharp drop at the gross level.

The performance at the operating level was worse as higher