Balkrishna Ind share slumps 10% as stock analysts cut targets on demand, biz foray

Shares of Balkrishna Industries Ltd plunged 10 per cent in Monday's trade amid price target cuts on the counter due to persisting concerns over demand uncertainty and the tyre manufaturer's foray into new tyre segments, specifically the Premium PCR and TBR categories that analysts said could weigh on return on equity (ROE) in the short term. 

The stock fell 10.33 per cent to hit a low of Rs 2,385. The scrip is down 15.82 per cent in 2025 so far against 2.12 per cent rise in the BSE Auto index.
 
Balkrishna's Q4FY25 revenue was 4 per cent above Bloomberg forecasts. Ebitda margin at 24.8 per cent was against the consensus estimate of 25 per cent. Ebitda was flat YoY, slightly ahead of expectations. 

"Volumes were 82k tons (flat y-y); ASPs were up 2.7 per cent QoQ. Lower other income, higher interest led to PAT miss (down 25 per cent YoY," Nomura India said.

The brokerage felt that the Balkrishna's entry in new segments may impact return on equity (ROE), as it downgraded the stock to 'Neutral' from 'Buy' with a revised target price of Rs 3,242 from Rs 2,644 earlier. 

MOFSL said Balkrishna Industries continued to face demand headwinds in its key global markets and, therefore, it cut its earnings estimates by 8 per cent each for FY26 and FY27. 

"To our surprise, Balkrishna Industries announced its foray into the niche PCR/TBR segments, which is likely to be critically monitored from here on for whether or not it is able to gain material traction in these segments and would margins and returns be materially dilutive in the long run," the brokerage said.

While the stock has not done well in the recent past and its valuations are not too demanding, MOFSL said adding that Balkrishna Industries' future target multiple is likely to be a function of its success in these new segments. 

The success will not only be in terms of market share gains but also without materially hurting core returns – which is likely to be a herculean task, MOFSL said.

"We have maintained our volume estimate of 9 per cent CAGR over FY25-FY27E and built in a margin improvement to 26.2 per cent for FY27. We believe that BKT is a very strong franchise and marketing efforts across geographies will result in better offtake along with its low-cost operations resulting in superior margins. We maintain HOLD rating with a target of Rs 2,645 from Rs 2,718 earlier," Nirmal Bang Institutional Equities said.