Shares of JK Tyres & Industries climbed 10.04% at Rs 77.30 after net profit jumped 157.5% to Rs 197.01 crore on 29.1% decline in net sales to Rs 1,377.81 crore in Q2 September 2019 over in Q2 September 2018.
On consolidated basis, the net profit jumped 160.20% to Rs 201.47 crore on a 13.59% drop in net sales to Rs 2154.95 crore in Q2 September 2019 as against Q2 September 2018.A spurt in net profit was driven by gains from deferred tax liability. During the period under review, the company said it has re-assessed deferred tax liability at 25.17% as against 34.94% earlier following reduction in corporate tax rate to 22% announced by the government. Accordingly, reversal of provision for deferred tax liability of Rs 158.04 crore has been done during current quarter of financial year 2019-20, it said.
JK Tyre & Industries CMD Raghupati Singhania said Indian economy, more particularly the Auto Industry, is passing through challenging times. Production for both passenger and commercial vehicles has been cut drastically during the quarter gone by. The company is navigating through these difficult times by focusing on all-round cost reduction on one hand, and renewed focus on exports on the other. JK Tyre recorded 20% increase in sales in two- and three-wheeler tyres in the current quarter, compared to preceding quarter, though it is a new entrant in this segment, Singhania added.
In its outlook, the company said it expects Indian economy to improve in the second half of current financial year and the green shoots are already visible with some improvement in economic activity. Volumes are expected to increase, resulting in improvement in profitability in the remaining period of the current financial year, the firm added.
JK Tyre has advanced 17.84% in four consecutive trading sessions to its current market price of Rs 77.6 from its previous closing low of Rs 65.6 on 25 October 2019.
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