JK Tyre & Industries (JKTIL) reported a robust Q3FY21 performance with highest ever quarterly sales and PAT. Net sales for the quarter were at Rs. 2,769 crore, up 25.4% YoY. EBITDA in Q3FY21 was at Rs. 500 crore with corresponding EBITDA margins at 18.1%, up 250 bps QoQ. PAT in Q3FY21 came in at Rs. 224 crore vs. Rs. 11 crore in Q3FY20 (impacted by low margins in base quarter) and Rs. 105 crore in Q2FY21. Sequential improvement in gross margins (~140 bps) was a key highlight for the quarter. Encouragingly, interest costs continued in downward trajectory.
Valuation & Outlook
Amid general positivity on both demand, margin front, solid progress delivered on B/S deleveraging is what continues to enthuse us the most. JKTIL has reduced gross debt by ~Rs. 1,000 crore in last nine months, and future commentary gives confidence. We build 13% sales, 49% PAT CAGR for JKTIL in FY21E-23E. Based on our estimates, the stock trades at inexpensive valuations. Accordingly, we remain positive on the stock and retain our BUY rating with target price revised to Rs. 180 (earlier Rs. 100). We value JKTIL at 5.25x EV/EBITDA on FY23E basis for our target calculation.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JKTyres_CoUpdate_Jan21.pdf
Shares of JK TYRE & INDUSTRIES LTD. was last trading in BSE at Rs.132.25 as compared to the previous close of Rs. 141.8. The total number of shares traded during the day was 567961 in over 10753 trades.
The stock hit an intraday high of Rs. 139.7 and intraday low of 130.3. The net turnover during the day was Rs. 76027562.