Q1 2027 JK Tyre & Industries Ltd Earnings Call Transcript
Key Points
- Domestic sales volume grew 25% year-on-year, driven by robust 42% growth in OEM and strong performance across segments.
- The company is taking price increases in a staggered manner, with cumulative hikes of about 11% already implemented and further 5-6% planned, which should help offset raw material cost pressures.
- Management expects margin improvement in the second half of FY27, targeting EBITDA margins in the range of 11-13%, supported by cost reduction measures, product mix enrichment, and operating leverage.
- Demand outlook remains strong across segments, with the Indian auto industry posting record performance and the farm segment growing 22% year-on-year, supported by rural demand and infrastructure growth.
- The company is expanding its manufacturing capacity with a INR4,980 crore investment in PCR and TBR at Chennai, and its EV tyre portfolio is gaining traction with double-digit volume growth.
- JK Tyre's mobility business is growing at high double-digit rates, supported by a pan-India network of over 100 truck wheels and 700 pit stops, enhancing customer engagement and service capabilities.
- Consolidated EBITDA declined significantly to INR268 crore from INR424 crore in the same quarter last year, with EBITDA margin falling to 6.8% from 10.9%.
- Raw material costs surged approximately 20% sequentially due to the West Asia crisis, impacting gross and operating margins.
- JK Tornel Mexico operations were impacted by geopolitical disruptions, constrained input availability, and productivity negotiations, leading to a sharp decline in profitability.
- Consolidated net debt increased by INR500 crore sequentially to INR4,945 crore, driven by CapEx-led loans and higher working capital requirements.
- Profit after tax dropped to INR43 crore from INR309 crore in the corresponding quarter, with EPS falling to INR1.5 from INR6.03.
- The company expects further debt increase of INR500-700 crore in FY27, which could pressure leverage ratios despite current comfortable levels.
Ladies and Gentlemen, good day and welcome to JK Tyre & Industries Limited Q1 FY27 earnings conference call hosted by MK Global Financial Services. (Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Mr. Chirag Jain. Thank you and over to you, sir.
Thank you, Atharva. Good afternoon, everyone. On behalf of MK Global Financial Services, I welcome you all to the 1Q FY27 earnings conference call of JK Tyre & Industries Limited. Today from the management team, we have with us Mr. Anshuman Singhania, Managing Director; Mr. Arun K Bajoria, Director and President international; Mr. A K Kinra, Financial Advisor; and Mr. Sanjeev Aggarwal, Chief Financial Officer.
I will now hand over the call to the management team for their opening remarks post which we will open the floor for Q&A. Over to you, sir.
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