On Monday, Citi updated its stance on Balkrishna Industries Ltd. (BIL:IN), revising the price target to INR2,350 from the previous INR2,400. The firm has maintained a Sell rating on the stock. Balkrishna Industries, also known as BKT, experienced a weaker-than-expected second quarter for the fiscal year 2025.
The company faced lower sales volumes than anticipated, attributed to reduced demand in significant export markets, specifically the European Union (EU) and North America (NA). However, the company’s Indian operations have shown stability.
The management of Balkrishna Industries has indicated that they do not foresee a quick resolution to the current demand challenges. Nevertheless, they project a marginal increase in volumes for the fiscal year 2025 compared to the previous fiscal year. In light of these developments, Citi has made slight adjustments to its earnings forecasts for the company for the fiscal years 2025 to 2027.
The adjustments are based on a combination of factors. The anticipated lower volumes, driven by weak global demand, are partially balanced by improved average selling prices (ASPs). These prices benefit from a favorable product mix and positive foreign exchange trends. Additionally, the company is expected to maintain steady gross margins.
The new target price of INR2,350 is a modest reduction from the previous INR2,400. Citi’s valuation of Balkrishna Industries remains consistent at 22 times the projected earnings per share (EPS) for the fiscal year 2026. This valuation reflects the firm’s cautious outlook on BKT’s near-term growth prospects amid the current market conditions.
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