homebusiness Newscompanies NewsBalkrishna Industries shares drop most in over a month after Nomura expects weaker first half of FY24
Balkrishna Industries shares drop most in over a month after Nomura expects weaker first half of FY24
Nomura said that the first half of financial year 2024 is likely to be much weaker for Balkrishna Industries as sales volume may decline on channel de-stocking.
Shares of Balkrishna Industries Ltd, one of the global leaders in producing tires for the agricultural sector, dropped nearly 4 percent in trade on Monday after brokerage firm Nomura anticipated a much weaker first half of financial year 2024 for the company.
The brokerage maintained its reduce rating on the stock with a price target of Rs 2,100, which implies a potential downside of 12 percent from Friday's closing levels.
Nomura said that the first half of financial year 2024 is likely to be much weaker for Balkrishna Industries as sales volume may decline on channel de-stocking. The brokerage further said that falling global crop yields can delay the expected recovery from the second half of the financial year.
Balkrishna Industries told the brokerage that it expects the industry to grow between 3-5 percent year-on-year over the medium-term. It maintained its 10 percent global market share target over the next 3-4 years from the current 5-6 percent.
Shares of Balkrishna Industries currently trade at around 16 times financial year 2025 forward EV/EBITDA, which, according to Nomura, is expensive, given the risks to the potential recovery.
Balkrishna Industries reported a 2.4 percent year-on-year topline growth in the March quarter, while the same for financial year 2023 grew at 17.7 percent.
Shares of Balkrishna Industries are trading 3.7 percent lower at Rs 2,301. The stock is down for the second day in a row. The stock has risen 8 percent on a year-to-date basis.
First Published: Jul 10, 2023 1:13 PM IST
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