Balkrishna Industries Ltd's Q4FY18 standalone net profit rises 40% yoy to Rs194cr : Misses Estimates

India Infoline Research Team | May 17, 2018 20:27 IST

The company’s standalone revenue stood at Rs1,231.76cr, up 23.02% yoy and 11.34% qoq.

Balkrishna Industries Ltd Q4FY18

Standalone Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 1,231.76 23.0
EBITDA 295.57 15.7
EBITDA Margin (%) 24 [152]
Net Profit (adjusted) 193.62 40.4
***EBITDA margin change is bps


Reco. Price


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Balkrishna Industries Limited (BIL) reported lower than expected numbers for Q4FY18. Standalone revenue was 23% yoy higher at Rs1,232cr, higher than consensus estimate of Rs1,196cr. EBITDA was 16% yoy higher at Rs286cr, while EBITDA margin contracted 152bps yoy at 24%. EBITDA was 17% lower than consensus estimate of Rs356cr, while EBITDA margin was lower than the 30% level that the street was estimating. Standalone PAT came in 40% yoy higher at Rs194cr, lower than consensus estimate of Rs214cr.

Other Highlights

  • BIL managed to keep total raw material expenses in check during the quarter (55bps yoy lower as % of sales) due to lower cost inventory. Employee costs too were 35bps yoy lower as % of sales. BIL has seen a yoy decline in employee costs (as % of sales) in 7 of the past 8 quarters. However, operating expenses were 242bps yoy higher as % of sales and that led to the lower-than-expected EBITDA. We expect input cost inflation to become visible from the current quarter as it usually happens with a lag of 1-2 quarters. Consequently, EBITDA margin stepped below even the 25% mark in Q4FY18, whereas the street had pencilled in 30% margin expectations.
  • Total volume in Q4FY18 was 17% yoy higher at 54,002MT. For the year FY18, BIL comfortably surpassed the guidance of 190,000-195,000MT. It reported volume of 199,213MT for FY18, growth of 16% yoy. For FY19, the company has guided for 220,000MT, implying growth of 10%.
  • The Board of Directors declared a dividend of Rs1.50 per equity share, taking the total dividend for Fy18 to Rs5.5 per share (on adjusted basis).
  • Long term debt on books of the company has reduced significantly from Rs810cr in FY17 to Rs217cr in FY18. Cash holding is Rs1,127cr.
  • The carbon black plant at Bhuj, Gujarat with 60,000MT per annum capacity will be commissioned in FY19.
  • We feel that rising input costs are a sector-wide phenomenon and hence not specific to BIL. We shall wait for management comments on price hikes, if any and other strategies to offset input cost pressures. It was heartening to see that the company surpassed FY18 volume guidance comfortably. The commencement of carbon black from FY19 onwards will lead to significant margin improvement due to backward integration benefits.

Highlights from post-result conference call

  • Global OHT industry continues to see strong demand; hence outlook is positive. America weaker than expected, Europe doing well.
  • Spike in other expenses (from 21% of sales to 24% of sales) was due to year end adjustments and bonuses paid. The number is expected to stabilize in the 20-21% range (as % of sales) in the ensuing quarters.
  • EURO/INR realization expected to be 82-83 in FY19 against 79 in FY18.
  • BIL took price hike of 2-35 in Q4FY18 to offset input cost inflation (mainly crude and carbon black). Going ahead, these could remain pressure points.
  • Capex guidance for FY19 is Rs400cr of which, Rs200-250cr will be maintenance capex and Rs150-200cr for carbon black plant. No major capex outlined for FY20, will be mainly routine caoex.
  • Volume growth in FY18; Agri 20%, OTR 16% (by segment), Europe 15%, India 22%, America 14% and others 14%.
  • Production from Buj plant was 22,000 units in Q4FY18 and 77,000 units in FY18.

Technical View:

Balkrishna Industries Ltd is currently trading at Rs. 1,195.70, down by 8.8 points or 0.73% from its previous closing of Rs. 1,204.50 on the BSE.
The scrip opened at Rs. 1,216.55 and has touched a high and low of Rs. 1,218.95 and Rs. 1,184.40 respectively. So far 2,97,065 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 50 DMA.

***Note: This is a NSE Chart



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