ICICI Direct recommended hold rating on Balkrishna Industries with a target price of Rs 820 in its research report dated February 12, 2019.
ICICI Direct's research report on Balkrishna Industries
Balkrishna Industries (BIL) posted muted Q3FY19 results Revenues came in at Rs 1,206 crore (up 9.0% YoY, down 9.0% QoQ). The company disappointed on the volume front (46,780 tonne; down 5.6% YoY). However, it said ASPs were up 9.0% YoY EBITDA inched up 3.8% YoY to Rs 301 crore, with margins at 25.0% (down 125 bps YoY & 14 bps QoQ). This was mainly due to higher raw material costs and other expenses that increased 23 bps YoY & 94 bps YoY, respectively Consequent PAT came in at Rs 145 crore (down 23.6% YoY) BIL has intimated that the first phase (60,000 MT per annum) of carbon black plant will be commissioned by Q4FY19E while the second phase (80,000 MTPA) will likely be commissioned in FY21. The total capex for the plant is to the tune of Rs 425 crore The company has declared an interim dividend of Rs 2/share.
Outlook
We now value BIL at 16.5x P/E on FY20E EPS of Rs 49.8 with a target price of Rs 820 with a HOLD rating on the stock.
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