Hold Balkrishna Industries; target of Rs 700: ICICI Direct

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ICICI Direct's research report on Balkrishna Industries

Balkrishna Industries (BIL) reported a disappointing set of Q1FY20 numbers. Standalone revenue at Rs 1,194 crore was down 12.4% YoY, led by 9.6% drop in volumes to 51,304 MT. EBITDA margins at 22.4% declined 125 bps QoQ tracking an increase in employee costs and other expenses as a percentage of sales. Consequent PAT came in at Rs 176.0 crore (down 23.6% YoY). BIL declared an interim dividend of Rs 2/share and announced an abeyance of greenfield US capex amounting to US$100 million (20,000 MT per annum) on account of the muted overseas demand scenario.

Outlook

We value the company at 16x its FY21E EPS of Rs 43.9 to arrive at a target price of Rs 700 per share. We maintain our HOLD rating on the stock.

For all recommendations report, click here

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