- 29 Oct 2021
- ICICIdirect Research
JK Tyre reports lower than anticipated EBITDA margins for Q2FY22
JKTYRE - 400 Change: -2.40 (-0.60 %)News: On a consolidated basis, JK Tyre reported sales of ₹ 2987 crore, up 15% QoQ with EBITDA at ₹ 292.4 crore and corresponding EBITDA margins at 9.8%, down 90 bps QoQ. PAT in Q2FY22 stood at ₹ 66.6 crore, up 44% QoQ supported by increase in sales and lower effective tax rate on QoQ basis. On standalone basis, QoQ sales growth stood at 17% while EBITDA margins declined 100 bps QoQ to 9.5% primarily driven by rise in raw material costs.
Views: Operating margin decline is ahead of our estimates. On the B/S front, cash flow generation remained weak with rise in debt levels on half yearly basis. The company’s performance on sequential sales growth basis is below one of its key competitors. With further gross margin decline in the offing due to rise in price of crude derivatives, near term profitability is expected to be muted at JK tyre going forward.