Balkrishna Industries..must have in our model portfolio

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Consider investing in Balkrishna Industries with conservative TGT of 750

The Company Overview( As per company website)


Balkrishna Tyres is part of well known industrial conglomerate in India, namely “Siyaram-Poddar Group” with group turnover of US$ 550 million. BKT today is one of the world’s leading manufacturers of “OFF-HIGHWAY TYRES”. BKT has the widest product range containing more that 1700 SKU’s (Stock Keeping Units) and is “One Stop Shop” for off-highway tyre solutions. Co. began it’s operations in 1988. BKT has made its mark in the niche segments like Agricultural, Construction, Industrial, Earthmover, ATV (All Terrain Vehicle) and Turf care applications.

About 95% of our tyre production is exported, out of which 70% is sold in Europe, where farms are large and scientific methods of farming, requiring tractors with different tyre types for agribusinesses. Other major markets for BKT are North America & Middle East followed by South America, Africa, Australia & Asia.

Key Milestones

1988: Aurangabad factory (Western India) commenced production, full fledge in-house R&D department established

1995: Production of Off Highway Tyres commenced.

1996: Commenced exports to Europe, USA and Australia.

2001: Production of Flotation & MPR Tyres.

2002: Established Bhiwadi Factory (Northern India).

2003: 1) Production of ATV, Lawn & Garden & Earthmover Tyres.& 2) Launch of: Tractor Radial Tyres (85 series) and UK office set-up.

2005: Launch of 70 series Tractor Radial Tyres.

2006: Launch of:1) Flotation Radial Tyres, Chopanki Factory (Green Field Project) & 2) Italy office set-up

2007: Launch of new series : 65 series, 90 series & Row Crop Tyres

2008: BKT has Launched Earthmax Tyre.

My Key points:(Drawbacks)
Euro has corrected by 15% recently so I haven't considered impact of FX hedging if any.
Lower operating margins in coming quater likely due to above effect as it exports are more concentrated in Europe.
 
Raw material:
Rubber is a diverse material and can be used in a variety of applications and industries. It is primarily used in manufacturing, construction and healthcare with the largest demand being driven by the automotive industry.
Natural rubber is an agricultural commodity used as a raw material in industrial processes.Rubber trees require a tropical climate.Currently, natural rubber is provided by Thailand, Indonesia, Malaysia, India, Vietnam, China and Sri Lanka.
Thailand, Indonesia and Malaysia combined produce 90% of the natural rubber used globally.Because of historically low commodity prices, these three countries have formed an alliance to control the amount of natural rubber supplied to the market place. Farmers in these countries are encouraged to keep production within set limits to maintain higher prices. In recent years, the production of natural rubber has decreased.I'm not aware of Production qouta limits in Indian markets. Rubber prices are firmly steadily in Indian market.
Competitors Comparision





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Audit Consolidated Results
 
Will write more about this firm.
 

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