JK Tyre expects "strong double digit" growth in FY24 amid robust domestic demand and improving exports
India's tyre industry's ambitious target of Rs 1 Lakh crore turnover in next three years resonates with JK Tyre's projections.
JK Tyre, which witnessed a 22% jump in consolidated revenues at Rs14,681 crore during FY2023 on back of robust domestic demand in key segments- commercial and passenger vehicle tyres- expect to hit "strong double digit" growth in FY24.
Speaking at a post result conference call Anshuman Singhania, Managing Director, JK Tyre said, "We hope to see strong double-digit growth in topline for this year (FY24) and healthy numbers on bottomline as well". The company's net profit increased by 30.72% to Rs 263.05 crore during FY23 up from Rs 201.24 crore in FY22.
The company management's guidance comes on a positive sentiment emerging from the forecast of normal monsoon, improving rural demand, infrastructure-led developments, economic growth, among others, although commodity prices remain a key monitorable going forward. The exports which had muted growth due to geopolitical issues during the previous fiscal year, are also expected to pick up in the second half (H2) of FY24.
The flagship company of JK Organisation, JK Tyre & Industries Ltd has presence across segments of passenger vehicles, commercial vehicles, farming, Off-the-Road and two & three-wheelers. It has a dozen manufacturing facilities - 9 in India and 3 in Mexico – that collectively produce around 33 million tyres annually. The company also exports to over 100 countries with over 180 global distributors.
JK Tyre's projections should be viewed in the context of India's tire industry aiming to achieve a turnover of Rs 1 lakh crore in the next three years, thanks to new capabilities. According to the Automotive Tyre Manufacturers Association (ATMA), a lobby body, the industry has invested Rs 35,000 crore in creating new capacities and debottlenecking in the last three years. These new capacities will operate over the next few years to meet the growing demand in an economy that is expected to remain the fastest growing for the next few years. ATMA stated that "The new capacity will help the industry notch a turnover of Rs 1 lakh crore in the next 3 years from Rs 75,000 crore currently."
The company continued that it has allocated a total of Rs 790 crore for capex, which is currently under implementation, primarily for two projects. The first project involves passenger car radial tires, with an estimated capex spend of Rs 530 crore. The second project is for truck bias radial tires, with an estimated capex spend of Rs 260 crore. The company has emphasized that both projects are expected to be commissioned in the current fiscal year.
International Finance Corporation (IFC), a part of the World Bank, in March this year invested Rs 240 crore in the company by way of CCDs.
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