BALKRISIND - Balkrishna Industries Ltd. Share Price

Management provided a cautious yet optimistic outlook for Balkrishna Industries Limited in their Q2 and H1 FY26 results conference call held on November 1, 2025. They highlighted the significant challenges faced, particularly due to the U.S. increasing import duties on Indian products to 50%, which impacted U.S. sales that made up about 10% of sales volume last year. Consequently, the overall sales volume decreased by 4% year-on-year, resulting in a standalone revenue of INR 2,360 crore for Q2 and INR 5,079 crore for H1, marking a marginal year-on-year decline.

Despite these hurdles, management expressed gratitude for the Government of India's reduction in GST rates, anticipating it would enhance end-consumer demand. There were positive sentiments around potential trade agreements between India and the U.S. that could alleviate tariff burdens and improve medium-term outlooks for U.S. sales.

In terms of strategic focus, management emphasized strengthening market positions in India and Europe and driving growth in global markets, particularly the U.S. once tariffs ease. They remain optimistic about achieving their long-term revenue target of INR 23,000 crore by 2030. A noteworthy achievement was the receipt of the Excellence award from Caterpillar for mining tire performance, coupled with a solid reputation for safety at the BKT Bhuj plant.

Management projects a capital expenditure of approximately INR 2,000"“2,200 crore for the current fiscal year, with an eye on further enhancing capacity and market reach. The firm is optimistic about long-term growth, driven by foundational investments and a favorable macro environment. They reiterated their commitment to capturing market share across diverse regions amid ongoing volatility.

Q&A Section Overview

1. Question: "For the U.S., once the situation eases out, how soon can we see the volumes coming back? What about inventory levels?" Answer: "We anticipate normalization in a couple of weeks, which may also trigger some pent-up demand. We're ready to service the market shortly after we begin receiving orders."

2. Question: "Regarding capex, where should we see it for this year, considering you guided for INR35 billion over the next 3 years?" Answer: "We expect this year's capex to end at about INR2,000 to INR2,200 crores. The remaining balance will be utilized over the next two years."

3. Question: "What is the margin impact from EUDR provisions? How will it affect subsequent quarters?" Answer: "The impact of EUDR has started; however, it won't fully affect this quarter's margins. We expect its full impact in the next quarter, but other raw material costs may soften to offset this."

4. Question: "How do you see the demand side in Europe panning out in H2?" Answer: "We hear headwinds in Europe are easing. While it's too early for definitive comments, we are cautiously optimistic about recovery."

5. Question: "Are you seeing competitors taking market share in the U.S. due to tariffs?" Answer: "Currently, we are not aware of competitors gaining share. U.S. clients are using existing inventory rather than looking for new supplies."

6. Question: "Is there a plan for M&A to strengthen market position?" Answer: "We are always open to evaluating M&A opportunities when they arise. Our focus remains on building our brand and infrastructure in the meantime."

7. Question: "When do you expect ramp-up in carbon black revenues?" Answer: "We anticipate carbon black revenues to ramp up in the next financial year, as the specialty segment starts to kick in."

8. Question: "Can we expect a low single-digit volume growth for this year? Any revisions?" Answer: "We are not providing specific guidance due to market volatility, but we're not changing our outlook based on current uncertainties."