Balkrishna Industries (BUY, 22% upside) - Ambit

Balkrishna Industries will announce its 4QFY13 results today. At the standalone level, we expect net revenues to decline by 2% YoY. Whilst volumes would likely decline by 9% YoY, average realisations are likely to increase by 8% YoY due to favourable currency movements. We expect EBITDA margins of 21.6% for the quarter, an increase of 455bps YoY due to softening rubber prices as well as favourable currency movements. We expect depreciation expenses to increase by 51% YoY due to the recent commissioning of the new Bhuj facility. At the net earnings level, we expect PAT to increase by 13% YoY to Rs865mn. Key metrics to watch out for: (1) management's outlook on demand particularly in the European and US markets, and (2) order book movement. The stock is trading at 7.1x FY14 net earnings. We retain our BUY stance.

Source : Equity Bulls

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