Balkrishna Industries - Company Update - ICICI Securities

Balkrishna Industries (BIL) posted healthy Q4FY20 results. Standalone revenue for the quarter came in at Rs. 1,357 crore (up 0.5% YoY), on the back of 4.7% rise in volumes to 57,966 MT. Margins declined 198 bps sequentially to 27.4% on account of 329 bps gross margin deterioration (largely led by year-end inventory adjustments), even as employee costs and other expenses declined 54 bps and 77 bps, respectively. Consequent PAT came in at Rs. 257.3 crore (up 39.3% YoY), tracking a rise in margins on a yearly basis, an increase in other income and decline in tax outgo. BIL commissioned Phase II of carbon black plant (80,000 MT) during Q4FY20.

Valuation & Outlook

BIL's structural margin accretive efforts along with expected resilience in volumes and long term debt free B/S and healthy cash flow generation merit significant premium in valuations over peers, in our view. With bulk of capex slated to be complete in FY21E, BIL will generate healthy FCF in FY22E. Hence, we upgrade BIL from HOLD to BUY with a revised target price of Rs. 1,450, valuing it at 25x FY22E EPS of Rs. 58.2.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BalkrishnaInds_CoUpdate_Jun20.pdf

Shares of BALKRISHNA INDUSTRIES LTD. was last trading in BSE at Rs.1254.8 as compared to the previous close of Rs. 1243.35. The total number of shares traded during the day was 42802 in over 3979 trades.

The stock hit an intraday high of Rs. 1293.15 and intraday low of 1239.45. The net turnover during the day was Rs. 54092675.

Source : Equity Bulls

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