Balkrishna Industries Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Balkrishna Industries Ltd (BALKRISIND) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:10:13] Siddhartha Bera from Nomura asked that on volume outlook, what has changed so much that the company is not giving volume outlook for the year. Rajiv Poddar Joint MD said that the reason is that geopolitical scenario has gone longer than expected in Europe and weather condition is also not giving a lot of confidence at the end user level.

• [00:12:43] Siddhartha Bera of Nomura enquired about the reason for price increase and the ASPs going up sharply by about 9% QonQ. Rajiv Poddar Joint MD replied that it’s due the overall product mix being better, dollar movement also has impacted the ASP and the higher contribution from North America sales.

• [00:14:14] Jinesh Gandhi with Motilal Oswal enquired about RM cost increase in 2Q23 and on current prices, what savings are expected. Madhusudan Bajaj CFO answered that both are softening. Raw material cost and sea freight are coming down. In 2Q23 the impact was 200 point increase due to the dollar price.

• [00:18:11] Ashutosh Tiwari from Equirus Securities asked that on the capex side, how will it be for FY23 and next year. Rajiv Poddar Joint MD replied that about another INR300-400 crores will be spent in FY23.

• [00:24:32] Sonal Gupta of L&T Mutual enquired about any visibility on the freight rates in 2H23. Rajiv Poddar Joint MD answered that freights are continuously going down. And the impact of that should start coming by Dec. onwards.

• [00:33:58] Basudeb Banerjee from ICICI Securities enquired about gross profit per kg, and sustainability or further improvement of it. Rajiv Poddar Joint MD replied that on gross margin, the company is estimating some RM correction and logistic costs going down which will help in margins and would see the benefit from 4Q23.

• [00:40:07] Nishit Jalan of Axis Capital asked that with the uncertainty seen in Europe, if it’s impacting retail demand on the agri side. Rajiv Poddar Joint MD said that the company is seeing both agri and OHT being impacted in Europe.

• [00:46:11] Abhishek Jain from Dolat Capital enquired about the logistics costs per tone in 2Q23 and the outlook for 3Q23. Rajiv Poddar Joint MD replied that logistics cost is marginally going down. However, due to higher contribution from US, the per ton cost is higher. The company is hopeful of 25-30% fall in logistics cost in the coming quarter.

• [00:47:33] Abhishek Jain from Dolat Capital asked about the price of natural rubber and synthetic rubber in 2Q23. Madhusudan Bajaj CFO answered that in 2Q22 natural rubber was INR150, but in 2Q23 it was INR157. Synthetic rubber was INR165 vs. INR178 for 2Q23. For 3Q23, natural rubber is INR157 and synthetic rubber INR178 to INR 145-150.

• [00:49:24] Disha Sheth from Anvil enquired that since the dollar rate is coming down, if any price decrease will be taken in the near future on new orders. Rajiv Poddar Joint MD clarified that the company has not taken any price decrease at the moment.