On Thursday, shares of JK Tyre & Industries surged 15% to hit a fresh 52-week high of Rs 133.45 after the company reported highest-ever quarterly sales and net profit for the December-ended quarter. The stock has surged 40% from Monday's (18 January) closing price of Rs 88.20.
The company's consolidated sales grew 26% year-on-year to Rs 2,776 crore, a best-ever for any quarter. The EBITDA (earnings before interest, taxes, depreciation, and amortization), meanwhile, doubled to Rs 507 crore and profit before tax (PBT) recorded a multifold increase to Rs 343 crore, compared with the corresponding quarter. EBITDA margins came at 18.1%, up 250 basis points on a sequential basis.
The strong performance during the quarter was largely driven by the increased demand for passenger, commercial vehicle as well as farm tyres. The continued focus on improvement in operating efficiencies and reduction in interest costs contributed to improved profitability, the management said.
ICICI Securities remains positive on the company amid its market leadership in the commercial vehicles tyre space, which is at the cusp of cyclical revival (OEM).
"JK Tyre's operating performance is a positive surprise. The sequential improvement in gross margins (around 140 bps) seems to be driven by some low-cost inventory and is in the diversion with the quarterly results reported by one of its key competitor (decline in gross margins by 110 bps). Encouragingly, interest costs continued in downward trajectory signaling further reduction in debt on company's balance sheet," the brokerage said in a note.