JK Tyre & Industries (530007) Q2 24/25 earnings summary

Executive summary

• Consolidated revenue for Q2 FY25 was INR 3,643 crores, down from INR 3,905 crores YoY, mainly due to lower OEM demand and high raw material costs; H1 FY25 revenue was INR 7,298 crores, down 4% YoY.

• Q2 FY25 profit after tax was INR 144 crores, with consolidated capacity utilization at 83%; H1 FY25 PAT was INR 358.05 crores.

• EBITDA margin contracted to 12.2% from 14.1% in the previous quarter, primarily due to a 6%-7% sequential increase in raw material costs.

• Board approved the merger/amalgamation of Cavendish Industries Ltd. into the parent company, aiming for operational synergies and value unlocking; expected completion in 10-12 months, effective April 1, 2025, pending regulatory approvals.

• Compulsorily Convertible Debentures of INR 240 crores converted into equity shares in September 2024.

Financial highlights

• EBITDA for Q2 FY25 was INR 443 crores, down from INR 597 crores YoY; H1 FY25 EBITDA was INR 958.57 crores.

• Cash profit stood at INR 323 crores versus INR 488 crores in Q2 FY24.

• Earnings per share was INR 4.93 for Q2 FY25; H1 FY25 EPS at INR 12.64.

• Net debt increased to INR 4,340 crores as of September 30, 2024, from INR 3,704 crores in March 2024, mainly due to working capital needs.

• Total consolidated assets as of September 30, 2024, stood at INR 14,875.79 crores.

Outlook and guidance

• Demand is expected to improve in H2 FY25, driven by the festive season, resumption of government infrastructure spending, and normalization of construction and mining activities.

• Export demand is recovering, with further growth anticipated despite ongoing supply chain and geopolitical challenges.

• Capacity expansions in TBR, PCR, and all-steel light truck radial tires are progressing and expected to be fully commissioned by H2 FY26.

• Focus on sustainable growth, product innovation, and expanding global presence, with continued investment in R&D and green technology.

• Management expects to reduce net debt by INR 1,500 crores over the next two years.