India Ratings upgrades long term issuer rating of JK Tyre to 'Stable'
- India's vehicle production surged during October-December as OEMs raised output to replenish stocks at dealerships before and after the festival season
NEW DELHI: JK Tyre and Industries Ltd, among India's largest tyre manufacturers, on Monday said tIndia Ratings and Research has upgraded its long-term issuer rating to ‘IND A/Stable’ on the back of strong recovery in sales and financial performance reported by the company in the December quarter.
The ratings upgrade and stable outlook reflects JK Tyre’s strong operating performance in FY21 on the strength of strong demand from replacement, original equipment manufacturers (OEMs) and export markets. Also higher operating efficiencies, leaner cost structure, and focus on better working capital management have resulted in higher cash accruals leading to debt reduction by more than Rs1,000 crore, the company said in a statement.
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The New Delhi-based company undertook aggressive marketing by expanding dealer network and brand shops in the current financial year to cater to high rural and suburban demand.
India's vehicle production surged during October-December as OEMs raised output to replenish stocks at dealerships before and after the festival season.
As a result, JK Tyre, Apollo Tyres, Ceat and others reported robust increase in net profit in the third quarter, driven a surge in sales.
"Ind-Ra expects tyre demand to sustain following a double-digit percentage increase in OEM and replacement demand. Ind-Ra expects that the initiatives taken by Company – OEM thrust, portfolio premiumisation, exports and launch of the ‘smart’ tyre segment - will enhance revenues, profitability and a sustained reduction in net leverage in FY22," as per the statement.
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