Balkrishna Inds

Balkrishna Industries has outlined a clear strategic plan to achieve approximately INR23,000 crores in revenue by 2030. This growth is underpinned by three key levers: enhancing the Off-Highway Tire (OHT) business to contribute 70% of enhanced revenue, expanding the carbon black business for a 10% contribution from third-party sales, and entering new tire categories in the Indian market to generate 20% of enhanced revenue. The company aims to maintain blended margins between 23% and 25% post full commercialization of these initiatives.

The company plans to reinforce its global leadership in the agricultural tire sector and expand its product portfolio in mining, industrial, and construction tires. Current OHT production capacity stands at 360,000 metric tons per annum, with plans to scale up to 425,000 metric tons through a 35,000 metric ton capex and debottlenecking. A dedicated manufacturing facility for rubber tracks has been approved, with production expected to commence in H2 FY26, enhancing product offerings and market reach.

Building on the foundation laid over the past three years, Balkrishna Industries is expanding its carbon black plant capacity from 200,000 metric tons per annum to 360,000 metric tons per annum. This expansion, expected to be completed by early 2026, aims to position the company as a strategic tire supplier and capitalize on synergies with tire operations. Additionally, a 24-megawatt cogeneration power plant will be added, increasing total power capacity at Bhuj to 64 megawatts.

Inspired by its success in the Indian OHT segment, where it holds over 15% share in the agricultural replacement market, the company plans a modular entry into the premium passenger car and commercial vehicle radial tire segments in India. The commercial vehicle radial tire pilot is scheduled to launch in Q4 FY25 and FY26, with PCR tires following in Q3 FY26 and FY27. These new verticals are projected to contribute around 20% of overall sales by 2030, targeting approximately 5% market share in India's non-OHT market.

To support its ambitious growth levers, Balkrishna Industries has outlined a capital expenditure plan of INR3,500 crores over the next three years. This investment is primarily intended for the expansion of rubber track facilities, carbon black capacity, and the development of new tire verticals. The company expects to fund this capex mainly through internal accruals, with an estimated spend of INR1,000-1,500 crores in FY26. Management emphasized that the company's strong financial position, including a net cash balance of INR115 crores as of March 31, 2025, provides ample funding capacity.

For Q4 FY25, the company reported a stand-alone revenue of INR2,838 crores, a 5% YoY increase, and an EBITDA of INR703 crores, representing a 24.8% margin. Full-year FY25 stand-alone revenue reached INR10,615 crores, growing 13% YoY, with EBITDA at INR2,682 crores, a 16% YoY increase, and a margin of 25.3%. Full-year PAT grew 13% to INR1,628 crores. However, Q4 PAT saw a 25% decline to INR362 crores, attributed to a mark-to-market loss of INR58 crores and higher financial costs.

Management expressed confidence in maintaining blended margins of 23% to 25% post full commercialization, citing competitive advantages such as an integrated carbon black plant that generates power and controls raw material costs. The company's strategy involves focusing on premium niches within new segments rather than generic levels to avoid margin dilution. While raw material prices are expected to peak in Q1 FY26, potentially causing a 1-2% margin decline, the long-term outlook remains stable at around 25%.