Tyres, perhaps the most neglected of accessories, are surely crucial for transport. JK Tyre and Industries Ltd knows this and has become the biggest player in the Indian market, more so with truck and bus radial tyres which ensures smooth movement of both goods and people around the country’s huge road network.
Industry Overview of JK Tyre
The world economy has recently been faced with the pandemic, geopolitical issues, and rising inflation. However, India is one of the finest-growing economies, reaching almost US$ 3.5 trillion of nominal GDP and near 7% growth estimates for the financial year 2022-23.
There is substantial resilience evident, with India being led by a consumption rebound, higher government spending on infrastructure, and strong agricultural growth. The automotive sector has reported growth of around 20% in sales during the financial year 2022-23. This is because it involves major employment base and contribution to India’s GDP. The growth has been due to new model launches, development in infrastructure, and a rebound in demand.
The tyre industry-although a bit belated by the shortages and high cost of raw materials-has largely benefited from the economic rebound and growth in OEMs. While the last quarter saw exports slow down, the after-market segment looked healthy. The radialisation percentage in the commercial sector is 60% and discussion with the auto industry is on to have tyres produced for electric vehicles.
Company Overview
JK Tyre and Industries was established on February 14, 1951. The company makes tyres for trucks, buses, multi-utility vehicles, light commercial vehicles, tractors, and passenger cars. It has spread its tents in more than 105 countries with over 180 distributors in its books. They churn out approximately 35 million tyres annually through 12 sustainable manufacturing facilities at nine locations in India and three in Mexico.
Robust distribution network: JK Tyre boasts of a robust sales network of more than 4,000 dealers and over 500 branded stores. They have been the pioneers in India to introduce tubeless passenger radials and high performance tyres catering to the top customers like Maruti Suzuki, Eicher, Ashok Leyland, TVS, Mahindra, and Tata Motors.
Financial Performance
JK Tyre has demonstrated solid financial performance in recent years:
Revenue for FY 2022-23: ₹12,453 crores by JK Tyre; a growth of ₹1,983 crores against last year’s revenue of ₹10,370 crores.
Net Profit for FY 2022-23: ₹520 crores, up by ₹205 crores against the previous year’s ₹315 crores EPS for FY 2022-23 is ₹12.5 as against ₹7.6 in the previous year.
Future Plans
JK Tyre will take its market reach further with an investment in new technologies to enhance its product offerings. It focuses on the following areas:
Innovation: JK Tyre is designing the new technology tyre, which shall continuously monitor pressure and temperature through the “Smart Tyre” system.
Expansion: Growing the production capacity, while exploring new markets.
Sustainability: Investment in sustainable manufacturing practices and material. Investment Opportunity
The share price of JK Tyre is now trading in the range of ₹410 – ₹430. The company had touched its all-time high at ₹553.95 on February 5, 2024. But despite a healthy bottom-line performance, rising profit booking pulled down the price.
Key Points from Raghupati Singhania’s Interview on JK Tyre
- Current Demand: The demand in India is strong and expected to grow by 6-7% in the coming year.
- Segment Performance: The passenger segment is showing the most robust growth.
- Debt-Equity Ratio: JK Tyre’s debt-equity ratio stands at 0.80:1, indicating good deleveraging.
- Mexico Operations: Specific outlook details on the Mexico operations were not mentioned, but overall, the company’s international operations contribute positively to their growth strategy.
CONTACT US
- Nehru House
4, Bahadur Shah Zafar Marg
New Delhi, 110 002 India - +91-11-66001112, 66001152
- info@jkmail.com
Conclusion
JK Tyre and Industries Ltd is one of the largest tyre manufacturers in the world, have a massive market share, and offer innovative products. With the Indian economy moving ahead with the auto industry looking pretty healthy, an investment here in JK Tyre presents an interesting story, no doubt. Of course, this piece of information should not be taken as investment advice. Please do your independent research or take an opinion from a financial advisor before investing. Thanks for commenting on this piece. For more company overview please click here
