Balkrishna Industries shares clocked an all-time high in morning deals on Tuesday (May 21) at Rs 3034.95 apiece on BSE. The buying in the stock came after the company posted better-than-expected Q4 results and numerous brokerages revised their stance on the stock.
The scrip surged 8 per cent to a fresh 52-week in early trade on May 21.
The tyre manufacturer reported a massive 87.4 percent increase in net profit at Rs 486.8 crore as compared to Rs 260 crore in the year-ago period.
Revenue growth for the fourth quarter was also strong at Rs 2,682 crore, up 16 percent compared to Rs 2,317 crore from the corresponding quarter of the previous fiscal.
The board has recommended a final dividend of Rs 4 per equity share (200 per cent) on the equity shares of Rs 2 each (face value) for the year ending March 31, 2024, subject to the approval of the Shareholders of the Company at the ensuing Annual General Meeting.
In a year, shares of Balkrishna Industries have given a return of 22 per cent against Nifty50’s rise of over 22 per cent.
What Should Investors Do?
Nomura upgraded the stock to ‘buy’ from ‘reduce’ and raised the target to Rs 3,230 from Rs 2,265 apiece. The brokerage believes strong growth momentum will continue and price hikes will support margins.
Also, the company is entering a demand upcycle and as global agri prices have started inching up, it should drive replacement demand. Additionally, global peers also expected a recovery in the second half.
The brokerage said the firm is set to enter a demand upcycle, as global peers are also slated to see a recovery in H2FY25. Nomura said Balkrishna Industries’ strong growth momentum is likely to continue and price hikes will support margins going ahead.
Motilal Oswal said the firm’s performance for the quarter ended March significantly beat its estimates, but the brokerage reiterated its neutral rating, with an increased price target of Rs 2,535.
Retail demand in key global markets is currently on an upswing, while demand in India also remains healthy. However, the management refrained from giving any volume growth guidance for FY25 as the demand outlook in key regions remains uncertain due to the ongoing geopolitical tensions.
However, Citi and Kotak Institutional Equities kept their sell ratings intact.
Kotak noted that the near-term outlook for the company remains volatile as a result of ongoing geopolitical tensions. This might cause a delay in shipments, leading to possible pressure on margins.
Additionally, valuations are looking expensive to the domestic brokerage. Kotak has a target of Rs 2,175 per share, indicating a potential downside of 22 percent.
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