Dolat Capital recommended accumulate rating on Balkrishna Industries with a target price of Rs 1412 in its research report dated July 23, 2020.
Dolat Capital's research report on Balkrishna Industries
The management in BIL’s Annual Report for FY20 acknowledges a temporary disruption in demand and supply chain due to COVID-19 but does not foresee any long-term challenges. Demand has been encouraging across geographies, driven by Agri segment on the back of favorable weather conditions in Europe, resolution of trade war in US and robust Rabi crop with a good monsoon forecast in India. After a weak volume in the month of April, there is a sharp recovery was seen in demand for the months of May and June for agriculture tyres due to good crop season and re-opening of economies in key European markets of Germany, France, Italy and Latvia. With solid competitive positioning, multiple strategic initiatives currently underway and sufficient capacity (~65% utilization), BKT is well positioned to capture up-cycle, translating into strong FCF and return ratio potential.
Outlook
We roll forward our valuation from FY22E to FY23E and recommend Accumulate with a TP of Rs 1,412 (22x FY23E EPS).
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