Balkrishna Industries Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from Balkrishna Industries Ltd (BALKRISIND) Q3 FY22 Earnings Concall

Q&A Highlights:

• Ashutosh Tiwari from Equirus asked how much price increase the company has taken since January 2022. Rajiv Poddar, Joint MD said the company has not taken anything in the Q321. In current quarter also the company has not taken any price increase. In 3Q22, BALKRISIND took roughly 2% to 3% of price increase.

• Ashutosh Tiwari from Equirus enquired that with respect to the end-market growth, is the company seeing growth across segments. Rajiv Poddar, Joint MD said the company is seeing demand growth across all the segments of products.

• Vimal Gohil from Union Asset Management asked that in conjunction with the global OHT market, what would be the company’s market share currently. Rajiv Poddar, Joint MD said that the global market share across all segments is roughly about 5%.

• Vimal Gohil from Union Asset Management also asked about the overall market growth going forward. Rajiv Poddar, Joint MD replied that looking at the average of the five year period the growth would continue to remain between 3-4%.

• Vimal Gohil from Union Asset Management asked about the driver for opex growth of around 50% YoY. Rajiv Poddar, Joint MD said OpEx impact has mainly come on two main accounts; apart from raw materials, it has been on power and logistic cost.

• Vimal Gohil from Union Asset Management enquired about the sharp decline in India volumes and how it should be seen going ahead. Rajiv Poddar, Joint MD replied the decline is in percentage terms. But the numbers per se are not declining. It is because the way the growth has come and export has got a higher share of those products, it is being for that. It is not that there has been a reduction in absolute numbers of tonnage being sent to India.

• Abhishek Jain from Dolat Capital asked about the increase in ad and promotion expenses in nine-month FY22 and the trend going forward. Rajiv Poddar, Joint MD replied that the company spent in aggregate to the tune of INR120-130 crores. BALKRISIND expect this to continue for the next few years to the same tune.

• Nishita Mehta asked about the freight and cost situation, how long it will persist. Rajiv Poddar, Joint MD answered that it’s a challenging situation for everybody. Availability of container to dispatch the material and cost are the two aspects of it.

• Pramod Amthe from InCred Capital asked about the competitor pricing action in the international markets. Rajiv Poddar, Joint MD said it’s broadly in line with what the company is doing.

• Pramod Amthe from InCred Capital also asked about how the company plan to increase the per kg realization until the new capacity comes on board. Rajiv Poddar, Joint MD said on the price hike, the company is watching it closely and observing the market. Accordingly the company will take a call.

• Ronak Sarda from Systematix Group asked about the production for the quarter and nine-month. Rajiv Poddar, Joint MD said that it’s roughly 70,300 tonnes for the quarter and roughly 213,000 tonnes for the nine-month.

• Devanshu Sampat of Yes Securities asked that post all the capacity expansion, including the carbon black 200,000 tonnes, how much would be the requirement on a 360-tonne tire capacity. Rajiv Poddar, Joint MD said roughly about 25% to 27% of the finished products. So roughly between 90,000 to 100,000 tonnes would be the carbon black consumption.

• Sunil Shah from Turtle Star Portfolio Managers asked how much of the company’s power requirement is met from the capital sources.  Rajiv Poddar, Joint MD answered that currently the company is at about 80%, once with the new production expansion and new power plant coming up, BALKRISIND should be close to about 95%. And in other plants it’s roughly about 40% through windmills etc.