Earnings Update - Balkrishna Industries (BIL IN) - Strong volume growth continues - CSEC Research

Strong volume growth continues

- In 4QFY17, Balkrishna Industries' revenues grew by 15.2%YoY to INR 10.0bn. Volume grew by 14.1% YoY to 46,149MT. EBITDA margin up 40 bps YoY to 25.5%. Margins were supported by lower staff cost (-99 bps YoY) & other expense (-578 bps YoY). PAT grew 1.8% YoY INR 1.3bn.

- Revenue mix: Europe accounts for ~55% of revenue, while America (South + North) and India account for 16% each and Rest of the world ~13%.

- BIL has taken price hike in the range of 3-4% from April 1, 2017, compared to its global peers, which have taken price hikes in the range of 8-10%. Production from the Bhuj plant for 4QFY17 and FY17 stood at 16,000 MT & 57,000 MT, respectively.

Valuation: We believe that company's strategy of higher utilisation, repayment of debt (likely to repay INR 6bn in FY18E) & deepening its reach will further supplement its growth. At CMP, the stock is trading at 16.0x FY19E. We value the stock at 18.0X FY19 E, arriving at a target price of INR 1,778 and maintain an OUTPERFORMER rating on the stock.

Risks: Slowdown in Europe & North America, volatility in commodity prices, unfavorable foreign exchange rate movements.

Shares of BALKRISHNA INDUSTRIES LTD.-$ was last trading in BSE at Rs.1591.4 as compared to the previous close of Rs. 1567.35. The total number of shares traded during the day was 16657 in over 2146 trades.

The stock hit an intraday high of Rs. 1621 and intraday low of 1560. The net turnover during the day was Rs. 26658474.

Source : Equity Bulls

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