Balkrishna Inds

Balkrishna Industries reported a Q2 FY26 volume of 70,252 MT, marking a 4% year-on-year de-growth, with H1 volumes also declining by 4% to 150,916 MT. Stand-alone revenue for Q2 stood at INR2,360 crores, contributing to an H1 revenue of INR5,079 crores, which saw a marginal decline YoY. The company's Q2 EBITDA was INR500 crores, achieving a margin of 21.5%, while H1 EBITDA reached INR1,155 crores with a 22.7% margin. Profit after tax for Q2 was INR265 crores and INR552 crores for H1, with performance impacted by lower American sales and higher Indian sales, alongside a realized foreign exchange loss of INR68 crores in Q2.

The company faced significant headwinds in the US market due to an increase in import duties to 50%, which severely impacted US sales, historically accounting for approximately 10% of last year's sales volume. This led to a decline in shipments to the US. Management indicated that they are currently not selling into the US market due to these tariffs. However, they expressed optimism for a potential turnaround within a couple of weeks if the situation eases, anticipating pent-up demand. The company aims to regain momentum in the US once the tariff situation improves.

Balkrishna Industries is strategically strengthening its market position in India, viewing it as a key derisking element against global uncertainties. The company's strategy to enter the Indian market in 2016-17 is now yielding positive results, with its agri market share exceeding 20%. Management highlighted the large opportunity across all off-highway sectors in India and expressed optimism for continued growth, further supported by recent GST rate reductions expected to stimulate end-consumer demand. The company is upbeat about India and sees a huge opportunity to capture market share.

The company is actively pursuing new product development, particularly for its commercial vehicle (TBR) and passenger vehicle (PCR) segments. A dedicated vehicle dynamics and testing base has been inaugurated at NATRAX in Indore to enhance tire testing and quality parameters. Management confirmed that progress on these new segments is as per plan, with the first production expected in the second half of the next fiscal year. The long-term aspiration for the TBR/PCR business is to achieve INR5,000 crores in revenue by 2030, targeting a 7-8% market share in the midterm.

For the first half of FY26, Balkrishna Industries incurred approximately INR1,737 crores in capital expenditure. The full-year capex is projected to be in the range of INR2,000-2,200 crores, which includes maintenance capex and investments in plant upgrades and new capacities. As of September 30, 2025, the company reported gross debt of INR3,615 crores and cash equivalents of INR3,159 crores, resulting in a net debt of INR456 crores. The Board declared a second interim dividend of INR4 per equity share, bringing the total dividend for the year to INR8 per share.

The company has proactively created inventory of raw materials to comply with the upcoming EUDR (European Union Deforestation Regulation) regulations, which will come into effect from January 1, 2026. While this measure is expected to impact procurement costs, management noted that raw material prices are generally on a softer side. They anticipate that the full impact of EUDR will be felt in the next quarter (Q3 FY26) but expect it to be largely offset by the softening of other raw materials, leading to an overall stable cost environment.

Balkrishna Industries reiterated its long-term vision of achieving INR23,000 crores in revenue by 2030, driven by continued market expansion and new product lines. The company's strategic focus remains on strengthening its market position in India and Europe, while also driving incremental growth from other global markets. Management emphasized ongoing investments in branding, infrastructure, manpower, and capacity expansion to build a strong foundation, positioning the company as a premium player ready to capitalize on future opportunities as global headwinds^🌐 ease.

The company continues to invest in brand building and enhancing its global presence. BKT received the Excellence level award from Caterpillar's Global Supplier Excellence recognition program for the fourth consecutive year. The Bhuj plant achieved a 5-star grading and a Sword of Honor Award for 2025 from the British Safety Council. Furthermore, BKT has been named the title sponsor for the Australia, India Men's ODI and T20s International Series, underscoring its commitment to continuous brand investment and market visibility.