(Reuters) – India’s JK Tyre & Industries reported its first quarterly profit fall in two years on Tuesday, hurt by weak tyre sales to car, bus and truck makers.
The tyre maker’s consolidated net profit for the July-September quarter fell 44% year-on-year to 1.35 billion rupees ($16.1 million).
Its second-quarter revenue declined 7% to 36.22 billion rupees, after dropping for the first time in four years in the April-June period.
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KEY CONTEXT
Domestic sales of buses and trucks fell 12% in the second quarter, while car makers’ sales declined for the first time in more than two years. This hurt JK Tyre’s earnings as it garners over 80% its revenue from such customers.
Indian tyre makers are also grappling with higher rubber costs due to global supply shortages, which pushed up domestic rubber prices by 20% during the quarter.
Larger rival CEAT and Goodyear India also reported a decline in quarterly profit. MRF will report its results later this week.
PEER COMPARISON
Estimates (next 12 months) Analysts’ sentiment
RIC PE EV/EBITDA Revenue growth Profit growth Mean rating* # of analysts Stock to price target** Div yield (%)
(%) (%)
JK Tyre & Industries Ltd 10.00 6.35 6.88 12.69 Buy 5 0.72 1.15
CEAT Ltd 15.72 7.55 10.25 13.71 Buy 15 0.86 1.10
Apollo Tyres Ltd 17.37 7.58 8.39 16.13 Buy 23 0.90 1.24
MRF Ltd 23.40 11.39 9.26 6.66 Sell 4 1.06 0.17
* The mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
($1 = 84.0680 Indian rupees)
(Reporting by Nandan Mandayam in Bengaluru; Editing by Sonia Cheema)
