Brokerage house Morgan Stanley has given an "underweight" call on Balkrishna Industries share price with a target price of Rs 1,928 apiece, citing the challenging export outlook of the company and the expected decline in volume. The target price for Balkrishna Industries implies a potential downside of 23% from the current market price.
In their research note, analysts at
Morgan Stanley said that the company's export outlook remains challenging, but management expects a better F2H24.
Balkrishna Industries management expects volumes to decline slightly year-on-year (YoY) in the current financial year (FY2023-24). Analysts are estimating a decline of 1.5 percent in volume YoY in FY24.
Ahead of estimates, Morgan Stanley expects an 8% growth in operating profit, or EBITDA, in the September quarter.
Balkrishna Industries, one of the global leaders in producing tyres for the agricultural sector, has increased the capex target to Rs 900 crore from Rs 600 crore earlier. The additional amount will be spent on raising its mould manufacturing capacity.
Another brokerage house,
Nomura, has given a "reduce" call on Balkrishna Industries with a target price of Rs 2,152 per share.
It expects the company's second quarterly operating profit, or EBITDA, to be in line. Moreover, volumes will partly benefit from inventory created in June 2023 as it could not be shipped due to Cyclone Biparjoy.
The company expects a stable trajectory to continue and lead to a better second half of FY24. Thus, it expects a marginal dip in volume in FY24.
Balkrishna Industries reported 2.4% year-on-year topline growth in the March quarter, while the same for the financial year 2023 grew at 17.7%.
At 9.44 am, shares of Balkrishna Industries were trading 0.56 percent higher at Rs 2,553.3 on the BSE.
(Edited by : Ajay Vaishnav)
