Down 10% in 2 days, this tyre stock may remain under pressue amid capex plans

Investors are however skittish about the company’s decision to increase the capacity of carbon black — a key ingredient for tyre making.

Synopsis
The tyre capacity expansion, which will be completed by the second half of FY23 is aimed at catering higher demand and has an estimated payback period of four years at the profit before tax level.

ET Intelligence Group: Balkrishna Industries’ decision to increase the extent of carbon black supply to third parties by expanding the existing plant capacity has not gone well with investors given the lower margin profile of the activity compared with the company’s overall operating margin. The stock of the off-highway tyre maker has lost 10% in the two trading sessions after the announcement on Monday evening. Its premium valuation over peers

Ashutosh R Shyam

ET Bureau

4 mins read

Feb 10, 2021, 07:49 PM IST

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