JK Tyre & Industries Limited — Q2 FY26 earnings call

Call held 29 Oct 2025

Management summary

JK Tyre & Industries Ltd. delivered a strong Q2 FY26, achieving its highest-ever consolidated revenues of ₹4,026 crores, a 10% YoY increase, driven by robust domestic volume growth across key segments and softening raw material prices. EBITDA saw a significant 21% YoY rise to ₹536 crores, with margins expanding to 13.3%. The Mexican operations also showed a strong recovery. Net debt increased due to strategic inventory build-up for the festive season, and the merger of Cavendish and JK Tornel is on track for completion by November 2025.

Highlights

  • Consolidated revenues reached a highest-ever ₹4,026 crores, up 10% YoY.

  • Consolidated EBITDA grew 21% YoY to ₹536 crores, with margin improving 240 bps QoQ to 13.3%.

  • PAT increased 54% YoY to ₹223 crores.

  • Domestic markets registered a 15% volume growth, with TBR replacement volumes up 22% YoY and passenger line replacement volumes up 16% YoY.

  • JK Tornel (Mexico) sales bounced back to ₹639 crores (up 26% QoQ) and EBITDA increased nearly five-fold to ₹49 crores.

Concerns

  • Net debt increased by ₹339 crores QoQ to ₹4,201 crores, primarily due to higher inventories of finished goods.

  • Gross debt increased by ₹243 crores.

  • Uncertainties around US tariffs for Mexican exports remain a watch item.

Key financials

  1. Consolidated Revenues ₹4,026 Cr +10%YoY
  2. Consolidated EBITDA ₹536 Cr +21%YoY
  3. EBITDA Margin 13.3% +2.4%QoQ
  4. Cash Profits ₹428 Cr +33%YoY
  5. PAT ₹223 Cr +54%YoY
  6. EPS ₹8.08
  7. Net Debt ₹4,201 Cr
  8. Net Debt to Equity 0.75×
  9. Net Debt to EBITDA 2.5×

What they filed

Q1 FY27: revenue up 13.6%, net profit down 52.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,515 3,264 2,674 3,453 3,516 +40%3,741 +15%3,903 +46%3,924 +14%
EBITDA253 274 263 394 478 +89%525 +92%511 +94%284 −28%
Net profit99 55 97 154 212 +114%178 +224%204 +110%73 −53%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Domestic Markets
    15% Volume Growth
  • Export Volumes
    13% Volume Growth
  • TBR Replacement Volumes
    22% Volume Growth
  • Passenger Line Replacement Volumes
    16% Volume Growth
  • Farm Category OEM Volumes
    78% Volume Growth
  • Farm Category Replacement Volumes
    12% Volume Growth
  • 2/3 Wheeler OE Segment Volumes
    155% Volume Growth
  • JK Tornel (Mexico)
    ₹639 Cr Sales₹49 Cr EBITDA
  • India Operations Category Mix (Value-wise)
    57% Truck Space (TBB & TBR)30% Passenger Line Radial4% 2/3 Wheeler10% Non Truck Bias
  • India Operations Market Mix
    63% Replacement24% OE13% Export

Capital allocation

high confidence
  • Capex ₹1,200 Cr funds available with the company
    • Passenger Car Radial (PCR) expansion at Banmore plant ₹1,025 Cr
    • TBR category expansion at Laksar plant ₹261 Cr
    • All Steel Light Truck Radial (ASLTR) expansion at Vikrant plant, Mysuru ₹112 Cr
    • Mexico capex $21 Mn
    So, Rs.1,200 crores of the total cash outflow is scheduled for this year and this includes some amount towards the normal maintenance capex as well. And as far as the working capital is concerned there was intentional addition to the finished goods because we wanted to be ready for the festive season but I think going ahead, the working capital reduction would be there and we are hoping that with working capital will come back to its normal levels. So, we have been implementing three projects, one is for the Passenger Car Radial (PCR) at a cost of Rs.1,025 crores at our Banmore plant in Madhya Pradesh. The second expansion is for Laksar tyre plant in Uttarakhand and this is for TBR category at a cost of Rs.261 crores and the third one is for the All steel light truck radial tyres (ASLTR) of Rs.112 crores which is going on at Vikrant tyre plant, Mysuru. So, these three projects put together will come up for production in the Q3 and the full ramp up will then gradually take place over the next 6 months period. And that is great. And this does not include the USD21 million for the Mexico capex that we are doing, correct?
  • Debt Net ₹4,201 Cr · 2.5× EBITDA
    Net debt as on 30th September 2025 stood at Rs.4,201 crores as compared to Rs.3,862 crores as on 30th June 2025, which is up by Rs.339 crores mainly on account of increase in working capital requirement for carrying higher inventories of finished goods. On the other hand, gross debt increased by Rs. 243 crores. This is mainly the funds which were available with the company and have been utilized for the purpose of the project's implementation. The balance sheet of the company continues to remain healthy with leverage ratios viz Net debt to equity at 0.75x and Net debt to EBITDA at 2.5x as on 30th September 2025.
  • M&A Cavendish and JK Tornel Merger · Pending regulatory · Consideration ₹[object Object] (undisclosed)

    Bring a lot of synergies to the merged entity

    Update regarding the merger, we are just nearing the next hearing date which is scheduled for 30.10.2025 with NCLT, Jaipur and we are expecting the merger to be completed in all respects by end of Nov'25 which will bring a lot of synergies for the merged entity.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · next two to three quarters · Medium confidence 13% to 15%
    So, margins are going to be in the range of 13% to 15%.

    — Anshuman Singhania

Revenue

  • Revenue Growth Revenue · going forward · Medium confidence double digit growth
    we are very confident that we will be able to achieve double digit growth on the revenues going forward.

    — Anshuman Singhania

Merger

  • Merger Completion Merger · end of Nov'25 · High confidence completed
    we are expecting the merger to be completed in all respects by end of Nov'25 which will bring a lot of synergies for the merged entity.

    — Sanjeev Aggarwal

Capacity

  • India Capex Production Start Capacity · Q3 FY26 · High confidence production in Q3
    these three projects put together will come up for production in the Q3 and the full ramp up will then gradually take place over the next 6 months period.

    — Sanjeev Aggarwal

  • Mexico Capex Production Start Capacity · Q4 FY26 · High confidence ready by the 4th Quarter
    as far as the Tornel is concerned, we will be ready by the 4th Quarter of this financial year.

    — Sanjeev Aggarwal

What to watch in Q3 FY26

Working Capital Normalization

next quarter
Current Increased due to intentional finished goods inventory for festive season
Target Normalization of working capital levels

Why it matters

Impacts cash flow and net debt, and its normalization is expected to improve financial health.

I think going ahead, the working capital reduction would be there and we are hoping that with working capital will come back to its normal levels.

Risks & concerns

  • US Tariff Uncertainty for Mexican Exports

    medium

    Uncertainties around US tariffs and the upcoming revision of the USMCA agreement in 2026 could impact Mexican exports to the USA, though the company is diversifying markets.

    Management watchful

  • Increased Working Capital

    low

    Net debt increased by ₹339 crores QoQ due to higher inventories of finished goods, which was an intentional build-up for the festive season and is expected to normalize.

    Management acknowledged

Q&A highlights

7 direct
Capex and Working Capital Normalization Direct
So, Rs.1,200 crores of the total cash outflow is scheduled for this year and this includes some amount towards the normal maintenance capex as well. And as far as the working capital is concerned there was intentional addition to the finished goods because we wanted to be ready for the festive season but I think going ahead, the working capital reduction would be there and we are hoping that with working capital will come back to its normal levels.

Clarifies the full-year capex plan and explains the increase in working capital as a strategic move for the festive season, with an expectation of normalization.

Asked by Basudev Banerjee

Raw Material Price Impact on Margins Direct
Yes, we expect the raw material price to remain rangebound in the coming quarters and definitely it will help us in the margin expansion.

Provides a positive outlook on future margin expansion due to expected stable raw material prices.

Asked by Basudev Banerjee

Price Cuts in Replacement Market Direct
No, there has been no price revision.

Indicates the company's ability to maintain pricing in the replacement market despite raw material price corrections, supporting margin stability.

Asked by Basudev Banerjee

US Tariff Uncertainty and Export Strategy Direct
Export grew by 13% QoQ and our exports to USA are only approx. 3% from the total revenue which we have successfully diverted to other countries where we are already supplying, namely Mexico, Latin America, Brazil. We have been able to divert these supplies and our strong markets being Middle East and even Southeast Asia which we are exporting and we are also exploring new markets like EU and UK and even Africa. So that will be our continuous focus going ahead. No, it will not impact our margins rather it will improve the margins.

Demonstrates the company's proactive strategy to mitigate US tariff risks by diversifying export markets and maintaining margin resilience.

Asked by Rehan Syed

Mexico Business Growth and Currency Impact Direct
In rupee terms, our revenue growth has been 26% on a QoQ basis and in terms of constant currency i.e. Mexican peso, growth has been 20% on a QoQ basis and we have seen that depreciation of Rupee to Mexican peso by around 7%. We see a continuous growth, as I and Mr. Bajoria already said that we are finding new market opportunities to expand our dealer base and looking for white spaces in Mexico and new export countries from Mexico. We are also enlarging our offerings by development of newer products, so we see a healthy growth coming in for the whole year.

Clarifies the strong growth in Mexican operations, the positive impact of currency depreciation, and the strategy for continued growth in international markets.

Asked by Abhishek Jain

Domestic TBR Replacement Demand Sustainability Direct
So, we have seen a comeback of OE demand in the CV segment (for LCV/ SCV bias tyres), which was earlier muted. We see that in the replacement market right now the inventories of tyres which the dealers were carrying in, that has been flushed out and thanks to GST 2.0 it has brought in a lot of demand surge there and we see with the better monsoon and better infrastructure push by the government, clubbed with rural demand coming in, a positive trajectory of demand. So, all that augers well in terms of demand for our truck radial tyres. Going forward, we see all categories should do well in the replacement as well.

Explains the multiple factors driving strong TBR replacement demand and provides confidence in its sustainability.

Asked by Abhishek Jain

OEM Volume Performance and India Revenue Growth Partial
In number terms, if you see OEM we are talking about the overall increase across segments put together that has gone up because there is a significant increase in the non-truck, tractor and also in 2/3wheeler segments. If you compare the OEM numbers in terms of rupees crores, this is 2% increase approximately. This is almost flat, but volumes are up mainly on account of 2/3w and the tractor, there has been some good increase. It is mainly because of the PCR since you are aware that in PCR, the selling prices are linked to the increase or decrease in the raw material prices. So that adjustment might have reduced the numbers on account of the value. To add to this, the net revenues of India operations it is 10% up on YoY basis.

Clarifies the nuanced OEM volume performance across segments and explains how raw material price linkage for PCR can impact revenue figures, despite overall volume growth.

Asked by Mitul Shah

Capacity Readiness for Demand Surge Direct
Our new capacities for PCR, TBR and All steel light track radial tyres are coming in India in the 3rd Quarter. And in fact, the PCR capacity has already started in the month of October, but the ramp up will happen by March'26. So, we are fully geared up to take up any surge in demand and we are ready to supply, we will not let any loss of sales on account of the capacity shortage. So, it will definitely get addressed. And as far as the Tornel is concerned, we will be ready by the 4th Quarter of this financial year.

Assures investors that the company is prepared to meet increased demand through timely capacity additions and ramp-ups, preventing sales loss.

Asked by S.B. Bhaiya

2 min read 6 chapters

Detailed narrative

Strong Q2 FY26 Performance Driven by Volumes and Margins

JK Tyre & Industries Ltd. reported its highest-ever consolidated revenues of ₹4,026 crores in Q2 FY26, marking a 10% year-on-year increase. Consolidated EBITDA stood at ₹536 crores, up 21% YoY, with an improved margin of 13.3%, reflecting a 240 basis point expansion quarter-on-quarter. Cash profits for the quarter were ₹428 crores, up 38% QoQ and 33% YoY, while PAT increased 54% YoY to ₹223 crores, driven by higher sales volumes and softening raw material prices.

Robust Volume Growth Across Key Domestic Segments

The company witnessed significant volume growth across its domestic markets, which grew by 15%. This was fueled by strong performance in various segments: TBR replacement volumes increased by 22% YoY, passenger line replacement volumes by 16% YoY, and farm category volumes saw a 78% rise in OEM and 12% in replacement. The 2/3 wheeler OE segment also recorded a substantial 155% YoY volume growth, indicating broad-based demand recovery.

Mexican Operations Recovery and Strategic Export Diversification

JK Tornel, the Mexican subsidiary, demonstrated a strong recovery with sales bouncing back to ₹639 crores, a 26% quarter-on-quarter jump, and EBITDA reaching ₹49 crores, nearly a five-fold increase QoQ. Despite uncertainties around US tariffs, the company successfully diversified its export volumes, which grew 13% QoQ, to other markets like Mexico, Latin America, Brazil, the Middle East, and Southeast Asia, with only approximately 3% of total revenue coming from US exports.

Significant Capex for Capacity Expansion and Future Growth

JK Tyre is implementing significant capex projects totaling approximately ₹1,400 crores in India. This includes ₹1,025 crores for Passenger Car Radial (PCR) at Banmore, ₹261 crores for TBR at Laksar, and ₹112 crores for All Steel Light Truck Radial (ASLTR) at Mysuru. These projects are expected to commence production in Q3 FY26, with full ramp-up over the subsequent six months. An additional USD 21 million capex for Mexico is planned to start production in Q4 FY26, ensuring readiness to meet growing demand.

Healthy Balance Sheet and Impending Merger Synergies

The company maintains a healthy balance sheet with a net debt to equity ratio of 0.75x and net debt to EBITDA of 2.5x as of September 30, 2025. Net debt increased to ₹4,201 crores, primarily due to an intentional build-up of inventories for the festive season, which is expected to normalize. The merger of Cavendish and JK Tornel is anticipated to be completed by the end of November 2025, which is expected to bring significant synergies and streamline operations.

Positive Outlook and Impact of GST Reduction

Management expressed confidence in achieving double-digit revenue growth going forward, with EBITDA margins expected to remain in the 13-15% range for the next two to three quarters. The recent GST reduction on tyres (from 28% to 18% for general, and 18% to 5% for farm tyres) is expected to act as a catalyst for growth, improving overall auto demand by 8-9%. The company has passed on 100% of this benefit to customers, further stimulating demand.

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