Balkrishna Industries Ltd (NSE: BALKRISIND) Q1 2026 Earnings Call dated Jul. 28, 2025
Corporate Participants:
Unidentified Speaker
Rajiv Poddar — Joint MD & Executive Director
Mr. Madhusudan Bajaj — Senior President,Director & Chief Financial Officer
Satish Sharma — Senior Vice President & Director of Business
Analysts:
Unidentified Participant
Raghunandhan N. L — Analyst
Mumuksh Mandlesha — Analyst
Aditya Jhawar — Analyst
Siddhartha Bera — Analyst
Rishi Vora — Analyst
Abhishek Kumar Jain — Analyst
Joseph George — Analyst
Vishal Dudhwala — Analyst
Chirag Maroo — Analyst
Hemang Kotadia — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to The Balkrishna Industries Limited Q1FY26 earnings conference call. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not guarantees of the future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference conference call please signal an operator by pressing Star then zero on your touch tone phone.
Please note that this conference is being recorded. I now hand over the conference to Mr. Rajiv Podar, joint Managing Director. Thank you. And over to you sir.
Rajiv Poddar — Joint MD & Executive Director
Thank you Mrs. Hoodam. Good morning to everyone and thank you for joining us today. Along with me I have Mr. Bajaj, Senior President Commercial and CFO. Mr. Satish Sharma, Senior President, Strategy and Business Development. Mr. Ravi Joshi, Deputy CFO Mr. Sushil Mishra, Head Accounts, NHGA, our IR advisors. Let me begin with performance updates. Q1 Financial Year 26 was a volatile quarter. On account of tariff related disruptions with the tariff announcements we witnessed a volatile ordering cycle in April. However, since the 90 day pause announcement on tariffs there was gradual return to normalcy. Pre tariff announcements we were subject to nominal tariff charge which is now increased to little over 10%.
We don’t expect any significant challenges on this new tariff structure. However, we do believe that the complete normalcy in ordering cycle will take shape once there is permanent tariff structure in place. In other geographies we witnessed a stable quarter. Americas witnessed a slight degrowth on account of macro situation. While the rest of the geographies.
operator
Mr. Rajeev, we can’t hear you. Mr. Rajiv.
Rajiv Poddar — Joint MD & Executive Director
Sorry. There was some disruption at our end. Let me re begin with the performance updates.
operator
Sure, sir.
Rajiv Poddar — Joint MD & Executive Director
The geopolitical environment and the broader macroeconomic scenario continue to present significant challenges across our key export markets. Amidst ongoing conflicts, trade tensions and economic uncertainties continue to influence cautious sentiments among customers. In addition to these external headwinds, continued tariff uncertainty has further compounded to the situation. Despite these testing conditions, we managed to achieve a sales volume of 80,664 metric tonnes during the current quarter. While this reflects a marginal Decline compared to Q1 of financial year 25, this performance demonstrates a degree of resilience given the prevailing global headwinds. India business continues to be strong and for the quarter contributed to approximately 35% to our sales volumes and approximately 14.4% in growth on year on year basis.
This growth momentum is a testimony of our brand acceptance and will further accelerate our efforts as we launch in the PCR and CV segments. As I was mentioning earlier, in the US the current tariff is 10% which is shared by our customers and us and in the near future the resolution of the ongoing tariff uncertainty. We are hopeful for a better trade environment and improved business conditions. Given the magnitude of challenges and uncertainties in international markets, we have delivered a strong performance and outperformed the industry. As we return to stable demand environment, we expect to further outperform and improve our market share all over.
On the CAPEX front, the earlier announced CAPEX of OTR along with newly announced CAPEX for carbon black, TCR and CVR are expected to operationalize as per schedule. With this I now move on to operational highlights. For the quarter our volume stood at 80,664 metric tonnes, marginally lower as compared to the same period last year. Our standalone revenue for the quarter stood at rupees 2,759 crores including realized loss on forex pertaining to sales of rupees 1 crore. The gross profit margin in Q1 was lower on account of product mix impact as well as 35% of the overall sales volume were contributed from India.
The standalone EBITDA for the quarter was at Rupees 655 crore with a margin of 23.8%. In addition to the to higher India contribution EBITDA margin was. The EBITDA margin impact was on account of partial absorption of tariffs for US geography and lower absorption for fish cost due to lower sales volume. Profit after tax stood for the quarter at rupees 287 crores which was approximately down 40%. This was primarily on account of M2M loss to the tune of rupees 154 crore. The board of directors has declared a first interim dividend of rupees 4 per equity share.
With this I now conclude my opening remarks and leave the floor open for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Raghunandan from Nuvama Research. Please go ahead.
Raghunandhan N. L
Thank you sir. For the opportunity sir. Firstly on Europe Europe has seen a decline y o y at 20%. And Europe Pharma sentiments seem to be weak on higher input cost impact of new regulation. Can you talk a bit about how you are seeing the customer sentiments in the replacement market? And how do you see the recovery in this market going forward?
Rajiv Poddar
So the current sentiments in Europe is weak and this is reflected in the numbers. Overall economic environment was also weak in Europe. So that is the reason for this continued numbers.
Raghunandhan N. L
So given that now we are four months into the year how do you see the FY26 outlook given all the uncertainty. But going ahead next two quarters we also have a favorable base. Would you expect to be on the positive side for the full year?
Rajiv Poddar
So too early to give a number and comment on that.
Raghunandhan N. L
Got it sir. And to Mr. Bajaj sir, if you can indicate the Euro Euro INR realization and the hedge rate for FY26.
Mr. Madhusudan Bajaj
So for the current quarter it was 93 rupees 60 paisa at and for the remaining year it is closer to the market.
Raghunandhan N. L
Got it sir. And just a last question before I fall back to the queue. Can you please share the freight cost as percentage of revenue that you usually used to share. Would it be lower? Qoq Given that there has been some fall in the global freight prices.
Mr. Madhusudan Bajaj
It was marginally lower.
Raghunandhan N. L
Got it. Thank you so much. And fall back to the queue.
operator
Thank you so much. The next question is from the line of Mumuks Manlesha from Anandrati Institutional Equities. Please go ahead.
Mumuksh Mandlesha
Yeah. Thank you so much for the opportunity sir. So I just want to understand. There has been a correction in the inventory this quarter. But in Europe where there was almost 20% down and in Q4 we saw 8% growth. So has any inventory adjustment this quarter in Europe and overall globally. How is the inventory situation now? Sir?
Rajiv Poddar
So nothing specific on the inventory correction. It is just the overall market sentiment.
Mumuksh Mandlesha
Got it sir. And so possible to quantify what was the US tariff impact in this quarter? Sir.
Mr. Madhusudan Bajaj
Currently the tariff is 10%. Out of that 60% is customer bearing and 40% we are sharing.
Mumuksh Mandlesha
40% is sharing. And that continues for Q2 also. Right sir. Got it sir. And so this quarter other expenses were 24 yoy in full. Q. Any reason for the increase in the other expenses? Sir? And what should be the run rate? Sir.
Rajiv Poddar
It is the duty impact and some marketing impact.
Mumuksh Mandlesha
Okay. So the US duty impact has come in other expenses. What you’re saying?
Rajiv Poddar
Yes. And the marketing being higher. Okay. So the run rate should continue as as of at least for Q2 because the duty would continue, right?
Mumuksh Mandlesha
Yes, got it, sir. And so this quarter for the RM sir, what kind of reduction we saw in Q1 and what kind of benefits further we expect going also.
Mr. Madhusudan Bajaj
So it was very nominal price reduction as compared to last quarter and the coming quarter we see the similar type of the prices because rubber is going up and other basket is down.
Mumuksh Mandlesha
For the Q2.
operator
Thank you. The next question is from the line of Aditya Jhawar from Investec. Please go ahead.
Aditya Jhawar
Hi. Thanks for the opportunity. So you mentioned that 50% of the tariff impact was absorbed by customers. So if you can give some sense that out of the total demand in the US market what percentage would be domestically procured and what is the competitor? How competitors have behaved in terms of tariff impact if they are also importing from outside us.
Rajiv Poddar
Sorry, just to continue on competitive dynamics. Just to correct you, net weight is 40%, not 50%. Sorry, could you be 40? So we are bearing.
Aditya Jhawar
Okay? Yes, sure, sure, sure. Answer Any sense on how competition has. Behaved in this environment? Sir, in terms of pricing or impact of tariffs. Hello.
Rajiv Poddar
So everybody is in the same boat. I mean we are not sure of how they have done the cost sharing. But tariff has impacted everybody. Even if there’s a local manufacturer is raw materials are coming from Asia. So they would have got impacted. And with the tariffs.
Aditya Jhawar
Okay, so the pricing gap between us and the competition even after the increase in, you know, tariff is largely the of similar magnitude.
Rajiv Poddar
Yes. Yes, should be.
Aditya Jhawar
Okay. Okay. Yeah, that’s it. Thank you.
operator
Thank you so much. I request each participants to ask two questions. Thank you. The next question is from the line of Siddharth Bera from Nomura. Please go ahead.
Siddhartha Bera
Yeah. Hi sir. Thanks for the opportunity. Sir, first question again on this US tariffs. I understand the tariffs came sometime during the quarter and not for the entire quarter. So will it be possible to share like of the total US revenues for US in Q1, what percentage has got impacted by the tariffs?
Rajiv Poddar
It came on the 9th of April, if you are not wrong. So that’s practically the whole quarter. No, but you’re right. It did not come for the whole quarter but nine days into the quarter. So it has impacted the whole quarter only practically.
Siddhartha Bera
Okay. Okay. Because US volumes have seen a good jump in the quarter. So this is despite the entire quarter being under tariff. And despite that we have seen a good pickup in the US volumes. Is it the right way to look at it?
Rajiv Poddar
So I mean if you look at it this way, it was originally pre the 9th of April there it was 26% which came down. So that as I mentioned my commentary that there was some normalcy which has come in. So they have been buying because of this revised tariff. Now we are waiting for the final note. What happens when the government agree on some tariff rate? We will come to know what the long term normalcy will be. It’s too early to comment before that.
Siddhartha Bera
But so generally what is the thought process like? Because we understand that it may go up even further. So you plan to sort of pass on the entire cost or you probably want to continue with the current scenario of 60%.
Rajiv Poddar
So what we have seen is we were quick to come to a cost sharing basis which has impacted on this. So we will take a call once we have final numbers in front of us. We don’t want to comment anything till the end. Final numbers are there. What are the tariff basis? Is this level higher? Lower? We don’t know anything. So without knowing anything is very difficult to comment.
Siddhartha Bera
Got it sir. Lastly on the capex side would you have any further color like three and a half thousand crore we had highlighted will be the next three years. Any possible breakup into what can go into tvr, PCR and how should we understand the ramp up to be in the next two, three years? If you have some thoughts here.
Rajiv Poddar
No, we are not sharing the breakup of that. We announced an overall capex which we will be doing in the next three years which will come in line in the next few years.
Siddhartha Bera
Okay sir, got it. I’ll come back and review.
operator
Thank you. The next question is from the line of Rishi Vora from Kotak Securities. Please go ahead.
Rishi Vora
Yeah, thank you Very opportunity. So my first question is on the. On the realized forex losses. So you highlighted that our hedge rate was 93.6 rupees for the quarter Euro NR. But the full year average, a full quarter average was around 97 rupees. So why is our losses lesser for the quarter? Can you just explain that math on how it works? How do we hedge? Like what is our hedging policy? Do we hedge 100% of our first year exposure or is it like 50, 60, 70%.
Rajiv Poddar
Rishi? So it will not be prudent to compare the normal average with the what age rate was mentioned. And it also accounts for the timing differences wherein the PCFC was taken earlier. Then there was a realization of repayment against that as well as the sales was booked at a different rate in the books and then the data realization happens at a different date. So it will not be prudent and probably you will not be end up to doing the right math that taking an average of a quarter and then comparing it with what we realized the.
Rishi Vora
Second quarter would be more reflective of the this quarter spot rate.
Rajiv Poddar
It all depends on what rate prevails at that point in time, at what rate date we have booked the sales in our books. And also just to add on to that, the custom rates are daily. You know, it’s a daily parameter. So we are booking and hedging against our sales and all. But when the actual sales gets transacted, what is the custom duty rate on that day? And that is how the gain or less is gain or losses calculated.
Rishi Vora
And our hedging policy would be like. Like for one year revenue expectation everything we would be hedging or it’s lesser than that.
Rajiv Poddar
Yeah, we keep on rolling basis and that to very conservative we edge 80% of net receivable which end up probably 30, 35% of gross euro revenue. We don’t edge anything on dollars.
Rishi Vora
Understood. I. I am assuming dollar would be naturally hedge because. Understood. And my second question is pertaining to full year margin guidance given where we are in terms of commodity tariff pricing like any broader guidelines you could share with at least in terms of margins or any headwind payment you see going into the financial into the subsequent quarters.
Mr. Madhusudan Bajaj
So we have already given the margin guidance in the even last quarter. So it will be around 24, 25%.
Rishi Vora
Okay, thank you.
operator
Thank you. The next question is from the line of Abhishek Kumar Jain from Alpha. Accurate. Please go ahead.
Abhishek Kumar Jain
Thanks for opportunity. Sir, you have imposed several rounds of the sanctions on the Russia trade restrictions on the machinery and the Russian oils as well. So how do you see direct and indirect impact on your business?
Rajiv Poddar
Sorry, your voice was very unaudable. Mr. Are you able to hear me now? Yeah.
Abhishek Kumar Jain
So my question was on the European Union. So that has imposed many sanctions on the Russia like that trade is turned on the machinery and Russian oil. So just wanted to understand how do you see direct and indirect impact on your business in Europe?
Mr. Madhusudan Bajaj
We don’t buy any machinery or direct raw material from Russia. Oil may be coming in some derivatives of the oils locally. I don’t know what way it is coming but otherwise they are not impacted from that.
Abhishek Kumar Jain
Okay sir. And you are also falling into the TDR and the PCR segment. So just wanted to understand when we’ll start the Commercial production and how much the operating cost will increase in the near term because of this.
Mr. Madhusudan Bajaj
June July 26th.
Abhishek Kumar Jain
June, July 26th. Okay. And how much operating cost will increase because of this in the near terms in the next one or two quarters.
Mr. Madhusudan Bajaj
We cannot comment, I think.
Abhishek Kumar Jain
Okay, sir, and my last question on the dealer inventory, so in terms of the days, how much the current dealer invented in the export side,
Rajiv Poddar
it’s at normal levels. There’s no increase or decrease. It’s at the normal level.
Abhishek Kumar Jain
So it will be two months or three months?
Rajiv Poddar
Between two and three months.
Abhishek Kumar Jain
Okay, thanks.
operator
Thank you. The next question is from the line of Joseph George from iifl. Please go ahead.
Joseph George
Thank you. I just have one question. You mentioned that the euro realization in the coming quarters would be closer to the existing market rate, whereas last quarter it was 93, 94. So what I want to check is. And you also mentioned that you are maintaining your margin guidance of 24, 25%. Now this euro benefit that you’re getting is a significant amount. So do you not expect that to flow down to the bottom line or do you think it will be completed away because there will be other players as well who are exporting from India and they will also have similar advantages?
Rajiv Poddar
No. So I think the volume impact will come, you know, as we’ve seen there is uncertainty. So that may come and have some impact on the running cost, fixed cost and other cost and the duties which have which were unaccounted for will have also come in place. So we, I mean a lot of things at this stage are very open to give a comment. And as far as the EBITDA guidances, we mentioned that we strive to be in this range, there will be a couple of quarters which will be higher and couple of quarters which will be lower.
The higher quarters are not in benchmark and the lower quarters are, you know, one off kind of scenario. But we will strive to be in that range. Fair enough.
Joseph George
Thank you. That’s all I have.
operator
Thank you. The next question is from the line of Vishal Dudwala from Trinetra Asset Managers. Please go ahead.
Vishal Dudhwala
Yeah, thank you for the opportunity, sir. Like, am I audible? Yes. Yeah. I have a couple of questions first. With global OTR tire demand set to grow mid single digit in FY26, driven by earning on monsoons in India and. Rising construction activity in export market, how. Are you calibrating production and segment agree and OTR to capture that growth without compromising margin?
Rajiv Poddar
So we produce only against order. We do not produce full stop. So as the orders are Coming, we are producing as per that. And already I mentioned in my opening remarks that the product mix had some difference. That’s why the EBITDA margin was slightly impacted. So that we will take it as per the demand very early to comment on what will come and where.
Vishal Dudhwala
Okay. And second is on your asset utilization. Your new boot OTR specialization expanded rubber track line. Well flies in Q1 26. So can you share the utilization level you achieved to date versus over 80% target?
Rajiv Poddar
It is in testing phase and we will give you more commentary on that towards the end of this year.
Vishal Dudhwala
Okay. And one last follow up question on Europe side like can you provide an update on the execution of your TBR expansion plan for that reason?
Rajiv Poddar
So as I mentioned, all the expansion that we have announced is going as per schedule. I will not be giving individual breakups.
Vishal Dudhwala
Okay, got your point. Thank you for the question.
operator
Thank you. The next question is from the line of Chirag Maru from Keynote Capitals. Please go ahead.
Chirag Maroo
Yes, thank you for the opportunity. So first thing I would like to know what is the mix of carbon black in our total sales?
Rajiv Poddar
What is the mix of carbon black.
Chirag Maroo
In our total sales?
Rajiv Poddar
Approximately 9%.
Chirag Maroo
And so will it be possible for you to provide volume numbers too?
Rajiv Poddar
No.
Chirag Maroo
Okay. The second thing I would like to know is that as we are adding new product lines like like ECR and related to commercial vehicle as well as the passenger vehicle, I wanted to understand your philosophy and thought process. What would be our right to win in this segment as we were earlier completely focused into majorly of hybrid.
Mr. Madhusudan Bajaj
So there is no dilution of our focus in off hybrid ielts. I’d like to make that statement very very clearly. Then the second point is we are looking at the market cleanly in finding the white spaces and the areas where to play. So we have a strategy which cannot be unfolded at this stage. But we are looking at the market keenly and devising our own strategy. And I think we will surprise the market positively.
Chirag Maroo
Fair enough. Secondly, I wanted to know, as you said that the product mix shift towards India has led to dilution of gross margins. Could you just give us a ballpark to understand it better? What does the pricing differential in international market compared to India.
Rajiv Poddar
It’S marginally maybe about half to 1% lower. You’re talking about margin, right?
Chirag Maroo
No sir, I’m talking about realization. Like if we sell it for 100 rupees in India, what will be the selling price in international market? So it would be easier for us to understand like if the mix shifts towards India, there Can be dilution taking place in GPM level
Rajiv Poddar
around it fluctuates. Between different product mix. But then you can take a range of 8 to 10% lower.
Chirag Maroo
Okay. And this effect on
Rajiv Poddar
the margin front it would be half. Between half and 1%.
Chirag Maroo
EBITDA level it would be half to 1%.
Rajiv Poddar
Yeah.
Chirag Maroo
Okay. Fair. Fair. And sir, just wanted to understand are we on track for the rubber Track expansion by H 2.6? Yes, that is it. That is it from us. Thank you sir.
operator
Thank you. The next question is from the line of Hemang from Anvil. Please go ahead.
Hemang Kotadia
Yes. Yeah. Good morning sir. I wanted to check that since we are doing 20% from India over next five years. So the margins, you just said the gross margins would be diluted. So there will be an impact on EBITDA margin. Because the staff cost is higher in India comparatively. As in we don’t have the labor arbitrage for Indian protection.
Rishi Vora
So as I mentioned in my you in the last meeting that despite all of our new businesses and India market strategy, everything, we expect blended margins post full commercialization to be in the range of 23 to 25%. And we will strive to maintain that.
Hemang Kotadia
So how will we have an advantage in tightening. Just thought, how will we have an advantage in passenger cars and TBR which we are planning? Because we have another competitor, many other competitors in Indian markets whose margins are in the range of 16%.
Rishi Vora
I made these announcements in my last quarterly when I announced our five year plan. So if you see that we had mentioned that we will be entering into premium categories and radial categories and you know there will be superior product mix and we’ll have some operational advantages put together which will help us maintain these numbers.
Hemang Kotadia
Sure. All the best, sir. And sir, near term challenges, anything on the volume outlook which we did around 3 like 15. This 315 tons this year.
Rajiv Poddar
As I mentioned earlier, it’s too early to comment on volume guidance.
Hemang Kotadia
Okay. Okay. Thank you.
operator
Thank you. The next question is from the line of Raghun and then from Nuvama Research. Please go ahead.
Raghunandhan N. L
Thank you sir. For the opportunity again, firstly on the 30,000 capacity of advanced carbon black as the revenues commenced from this business, how do you see the ramp in FY24?
Mr. Madhusudan Bajaj
Not significantly. It is still in the trial stage. And this end of the last quarter means end of the calendar year. We accept to ramp up this business.
Raghunandhan N. L
Got it there. Thank you. And on the track side, how much would be the share of tracks in our revenue currently? And given that the new capacity will come up in H2, how do you see the ramp up there?
Rajiv Poddar
So Trax is currently in trial stage and so it’s very normal.
Raghunandhan N. L
Thanks for that, sir. My question was to Satish. Sir, you know how big would be the current BKT dealer network in India and would you be using the current network for dbr, pcr? How do you look at the strategy on distribution of new products? Would you be leveraging it or would you be building it from the scratch especially to target the PCR segment?
Satish Sharma
Raghu, the approach and philosophy of distribution will by and large be the same. And that’s where the leverage in terms of positive points will come. But the distribution per se largely will be newly made. So some part of it might overlap a very little portion, but largely it will be a fresh start.
Raghunandhan N. L
Got it sir. That would mean that there will be a gestation period for building a network and capturing that 5% market share. And would that be the reason why you’re targeting 2030 for that market share target?
Satish Sharma
Yeah, I mean that’s a fair. I mean that amount of time will be required to go from 0 to 5% whichever way you look at it. And our product, like we said in an earlier question, comes out in the middle part of next year and this is the time gestation period which we will be using to build a distribution.
Raghunandhan N. L
Got it sir. And just a clarification on how big would be the existing network of Balkrishna in India?
Rajiv Poddar
76 or.
Raghunandhan N. L
Got it sir. Thank you very much.
operator
Thank you. The next question is from the line of Chirag Maru from Keynote Capitals. Please go ahead.
Chirag Maroo
Yeah, thank you for the follow up. So will it be possible going forward to give some segmental numbers? As Carbon Black has already reached almost 9 percentage of the sale, so we can get some segmental bifurcation on sales and operating margins.
Rajiv Poddar
At this moment we are not giving the breakup. So we’ll see in the future if you decide to shop,
Chirag Maroo
no issues. Just secondly, will it be possible for you to give us what kind of market size the Rubber Track product would have at this moment? Just to understand how big is the market?
Rajiv Poddar
The market is huge. With our current capacity in the future one which we have announced, even if we get there, we will be looking at about 3 to 5% of the market share.
Raghunandhan N. L
Okay, thank you sir.
operator
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Rajiv Podar for closing comments.
Rajiv Poddar
I would like to thank all of you once again for taking the time out and we’ll see you again next quarter. Thank you. Stay safe.
operator
On behalf of Balkrishna Industries limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.