JK Tyre & Industries Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

JK Tyre & Industries reported a strong Q3 FY26 with highest ever consolidated revenue of INR 4,235 crores, marking a 15% YoY growth. Profitability significantly improved, with EBITDA expanding by 470 basis points to 13.8% and PAT surging 3.7x to INR 209 crores. This performance was driven by robust domestic volume growth, strong contribution from the Mexican subsidiary, and high capacity utilization, despite an expected 1-2% increase in raw material prices in Q4.

Highlights

  • Highest ever consolidated revenue of INR 4,235 crores, up 15% YoY.

  • EBITDA of INR 583 crores, with margin of 13.8%, reflecting 470 bps expansion.

  • PAT surged 3.7x to INR 209 crores.

  • JK Tornel (Mexico subsidiary) revenue up 21% YoY to INR 616 crores, EBITDA up 45% to INR 58 crores.

  • Domestic volume growth of 16%, with replacement up 11% and OE up 24%, driven by strong demand across segments.

Concerns

  • Raw material prices expected to remain range-bound with 1-2% increase in Q4.

  • Incremental financial implication of INR 56.75 crores due to new Labor Codes, treated as an exceptional item.

Key financials

  1. Consolidated Revenue ₹4,235 Cr +15%YoY
  2. Consolidated EBITDA ₹583 Cr +73.9%YoY
  3. Consolidated EBITDA Margin 13.8%
  4. Consolidated PAT ₹209 Cr +266.7%YoY
  5. Consolidated EPS ₹7.29 +294%YoY
  6. Net Debt (Dec 31, 2025) ₹4,183 Cr
  7. Net Debt to Equity 0.71×
  8. Net Debt to EBITDA 2.17×
  9. JK Tornel Revenue ₹616 Cr +21.5%YoY
  10. JK Tornel EBITDA ₹58 Cr +45%YoY
  11. JK Tornel EBITDA Margin 9.4%
  12. Domestic Volume Growth 16%
  13. Export Volume Growth 9%
  14. India Capacity Utilization 90%
  15. Consolidated Capacity Utilization 85%

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

  • Revenue Mix (Standalone)
    58% Truck & Bus27% Passenger Car11% Non-truck bias4% 2/3W
  • Market Mix (Standalone)
    63% Replacement26% OEM11% Exports

Capital allocation

high confidence
  • Capex ₹1,130 Cr
    • Capacity expansion across TBR, ASLTR, and PCR categories ₹1,130 Cr
    The company has decided to further expand its capacities across TBR, ASLTR and PCR categories through expansions at various locations for an aggregate cost of INR 1,130 crores. This will increase our overall capacity by nearly 7%.
  • Debt Net ₹4,183 Cr · 2.2× EBITDA
    • Repayment Some working capital loans of CIL were repaid to avail working capital in JK Tyre at better interest rates post-merger.
    • New borrowing Fresh disbursements were taken for expansions which increased the term loans.
    Net debt as on 31st December stood at INR 4,183 crores as compared to INR 4,201 crores as on 30th September 2025. Fresh disbursements were taken for expansions which increased the term loans. On the other hand, some working capital loans of CIL were repaid to avail working capital in JK Tyre at better interest rates post-merger. The balance sheet of the Company continues to remain healthy with robust key financial leverage ratios with Net debt-to-equity at 0.71x and net debt to EBITDA at 2.17x.
  • M&A Cavendish Industries Limited (CIL) Merger · Closed

    Value enhancer, operational and financial synergies, capacity utilization scaled from 30% to over 95%.

    Brought forward losses from CIL might have contributed to income tax benefits.

    During the quarter, we completed the merger of our subsidiary company Cavendish Industries Limited with JK Tyre after securing all statutory approvals. CIL has undergone a remarkable transformation under JK Tyre's leadership. JK Tyre provided all the necessary technical, financial and managerial support and capacity utilization was scaled up from around 30% to over 95%, making it JK Tyre's yet another successful turnaround acquisition after Vikrant Tyre and JK Tornel, Mexico. I would like to bring to your attention, that this merger is going to be a highly value enhancer and will bring a lot of operational and financial synergies through pooling of resources.

Guidance & targets

Raw Material Prices

  • Raw material price scenario Raw Material Prices · Q4 · High confidence 1-2% increase
    In Q4, the raw material price scenario is expected to remain range-bound (1 - 2% increase).

    — Anshuman Singhania

Revenue Growth

  • Revenue growth Revenue Growth · Next quarter (Q4) and going forward · Medium confidence Mid-double-digit growth
    We are expecting a mid-double-digit growth, just as we have seen in this last quarter, if the momentum continues, which is expected to be more likely.

    — Anshuman Singhania

EBITDA Margin

  • EBITDA margin EBITDA Margin · FY27 (implied) · High confidence 13% to 15%
    Yes, we will because there is a lot of robustness in terms of the OE demand and we are the largest in the truck and bus. So, there we are seeing good throughput coming in and it is going to be sustained even in the FY'27. And we also see a good traction in the passenger car line as well, where our premiumization is playing an important role in terms of margin expansion. Last year the contribution of 16-inch & above PCR tyres in our mix was around 27% and today we are at nearly 31%. So, that is also panning out for us. And we are also expanding the capacities as I mentioned by INR 1,130 crores, where we are also undertaking more expansion in the passenger line, which will further enhance the higher rim size capacities.

    — Anshuman Singhania

Mexican Business (JK Tornel) Growth

  • Domestic Mexican market and export market growth Mexican Business (JK Tornel) Growth · Next one year · Medium confidence Mid-single digit growth
    We are looking at the mid-single digit growth.

    — Anshuman Singhania

Mexican Business (JK Tornel) Margin Expansion

  • Margin expansion Mexican Business (JK Tornel) Margin Expansion · Near-term (implied) · Medium confidence 1% to 2%
    We are looking in the range of about 1% to 2%.

    — Anshuman Singhania

Capacity Expansion

  • Overall capacity increase Capacity Expansion · Not specified, linked to capex · High confidence Nearly 7%
    This will increase our overall capacity by nearly 7%.

    — Anshuman Singhania

Capacity Expansion Completion

  • PCR expansion at Banmore Capacity Expansion Completion · July '26 · High confidence Full capacity
    So, our PCR expansion at Banmore is already under ramp up. It is already completed and it's going to attain its full capacity by July'26...

    — Anshuman Singhania

  • TBR capacities at Laksar Capacity Expansion Completion · April '26 · High confidence Completion
    ...and for TBR capacities at Laksar by April'26.

    — Anshuman Singhania

What to watch in Q4 FY26

Raw Material Price Trend

Next quarter (Q4 FY26 results)
Current Expected 1-2% increase in Q4
Target Actual price movement and impact on margins

Why it matters

Raw material costs are a key determinant of profitability in the auto component sector.

In Q4, the raw material price scenario is expected to remain range-bound (1 - 2% increase).

Risks & concerns

  • Raw Material Price Increase

    medium

    Raw material prices expected to increase by 1-2% in Q4, but management is confident in mitigating impact through volume, premiumization, and utilization.

    Management acknowledged

  • Geopolitical Uncertainties / Trade Deals

    medium

    Exports grew by 9% despite geopolitical uncertainties. Monitoring USMCA revision in July 2026 for business with USA, while EU and USA trade deals are expected to benefit market diversification.

    Management acknowledged

Q&A highlights

6 direct
Revenue growth drivers (volume vs. pricing) Direct
Majorly it is because of the volume growth with some price increases in certain selective SKUs only. So, majorly it is because of the volume.

Clarifies that the strong 15% revenue growth was primarily volume-driven, with minimal price hikes, indicating robust demand.

Asked by Bharat Bhagnani

Margin outlook given raw material price increase Direct
Raw material basket is expected to remain rangebound as I said and it is expected to be inching up by 1-2% going ahead but the margins are going to be intact because there is a lot of volume push in this and our premiumization will also play a key role in the margin expansion. Also, the higher capacity utilization will also play a role in that.

Addresses investor concern about margin sustainability despite rising raw material costs, highlighting volume, premiumization, and utilization as offsets.

Asked by Bharat Bhagnani

Comparison with competitor's higher revenue growth Direct
We are targeting a double-digit revenue growth and since you mentioned about the competition, particularly CEAT, please be aware that they have a larger base of 2/3W as well and also support from a recent acquisition. They acquired one Company Camso and that company has added to their overall revenues.

Provides context for JK Tyre's growth relative to a competitor, explaining differences due to segment mix (2/3W) and M&A activity, reassuring investors about the company's own growth trajectory.

Asked by Bharat Bhagnani

Mexican business (JK Tornel) performance and currency impact Partial
The net revenues has gone up by 21% on a year-on-year basis. As I mentioned, from INR 507 crores in Q3FY25, it has gone up to INR 639 crores in Q3 this time. In constant currency terms, the revenues of JK Tornel has been flattish.

Clarifies that while reported revenue growth for JK Tornel was 21% YoY, a significant portion of this was due to favorable currency movements, with constant currency revenue being flattish.

Asked by Ronak Mehta

Sustainability of demand in replacement market post-GST benefits Direct
So, we are entering the Quarter 4, which is expected to be very strong, and we are very confident about the healthy growth coming across the sectors. GST has definitely boosted the affordability, but other macro tailwinds are supporting as well, which are rural demand, positive consumer sentiment, and lower interest rates which gives a very positive momentum to the demand. And we see that continuing momentum into FY'27.

Addresses concerns about demand sustainability beyond immediate GST benefits, highlighting broader macro tailwinds supporting continued growth into FY27.

Asked by Ronak Mehta

Pricing power in the industry given capacity expansion and high utilization Partial
Keeping in view the demand supply situation and the overall market dynamics, whatever necessary price revisions may have to be undertaken going ahead will be done.

Indicates management's willingness to take price hikes if market conditions (demand-supply, raw material costs) warrant it, suggesting potential for margin protection.

Asked by Ronak Mehta

Mexican business export contribution and benefits of local production Direct
It is nearly 40%. Yes, the benefit is because we are having local production capacities there in Mexico, we get the benefit of a low-cost base and that's why we've been able to supply tyres into the local market and export as well. So, yeah we do get that benefit.

Provides insight into the export mix of the Mexican subsidiary and the strategic advantage of local production in Mexico for both domestic and export markets.

Asked by Abhishek Jain

Exceptional items and effective tax rate Direct
So, there are three exceptional item in this note, one is the stamp duty, which is because of the merger activity and is One time. The other one is foreign exchange losses, as you would know, there was a huge volatility during the quarter. And this is also not the realized loss, this is mark-to-market partly. And the third one is because of the labor codes, and it is also a one-time charge.

Clarifies the nature of exceptional items, confirming most are one-time or mark-to-market, and explains the effective tax rate is around 25% due to deferred tax benefits and CIL's brought-forward losses.

Asked by Bharat Bhagnani

2 min read 7 chapters

Detailed narrative

Strong Q3 FY26 Performance Driven by Volume and Margins

JK Tyre & Industries reported its highest ever consolidated revenue of INR 4,235 crores in Q3 FY26, a 15% year-on-year increase from INR 3,694 crores in Q3 FY25. This growth was primarily volume-driven, with domestic volumes up 16% and exports up 9%. EBITDA expanded significantly by 470 basis points to 13.8%, reaching INR 583 crores, while Profit After Tax surged 3.7x to INR 209 crores.

Robust Domestic Demand Across Segments

The Indian auto industry experienced strong momentum, with CV sales expected to exceed 1 million units in FY26 and PV sales reaching a record 4.38 million units. JK Tyre capitalized on this, achieving 16% domestic volume growth, with replacement segment volumes up 11% and OEM volumes up 24%. The company noted strong traction in TBR (15% replacement, 33% OEM) and Passenger Line (18% overall, 24% OEM) segments.

Strategic Capacity Expansion and Utilization

To meet growing demand, JK Tyre is expanding capacities across TBR, ASLTR, and PCR categories with an aggregate investment of INR 1,130 crores, projected to increase overall capacity by nearly 7%. The company maintained high capacity utilization, exceeding 90% in India and 85% consolidated, contributing to operational efficiency and margin stability. PCR expansion at Banmore is expected to reach full capacity by July 2026, and TBR capacities at Laksar by April 2026.

Positive Contribution from Mexican Subsidiary (JK Tornel)

JK Tornel reported a robust 21% year-on-year revenue growth, reaching INR 616 crores, and a 45% increase in EBITDA to INR 58 crores, with margins improving by 148 basis points to 9.4%. However, in constant currency terms, the revenue growth was flattish, indicating a significant currency tailwind. The subsidiary's exports contribute nearly 40% of its revenue, benefiting from local production capabilities and a low-cost base.

Focus on Premiumization and Innovation

JK Tyre continues its focus on product premiumization, with the contribution of 16-inch and above PCR tyres in its mix increasing from 27% last year to nearly 31%. The company launched embedded smart tyres for passenger cars and secured new OEM approvals for EV tyres for Hyundai Creta and Tata Punch, demonstrating its commitment to innovation and the evolving EV market.

Raw Material Outlook and Margin Management

While raw material prices are expected to increase by 1-2% in Q4, management expressed confidence in maintaining margins. This confidence stems from continued volume growth, premiumization efforts, and high capacity utilization. The company also indicated a willingness to undertake necessary price revisions based on demand-supply dynamics and overall market conditions to protect profitability.

Merger of Cavendish Industries Limited (CIL)

The merger of Cavendish Industries Limited (CIL) with JK Tyre was completed in December 2025, effective April 1, 2025. CIL's capacity utilization significantly improved from 30% to over 95% under JK Tyre's management, and the merger is expected to bring substantial operational and financial synergies. The company also noted that CIL's brought-forward losses contributed to a lower effective tax rate of around 25% this quarter.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Automobile and Auto Components earnings calls