Shares of Balkrishna Industries Ltd plunged 9.37% to Rs 2,411.00 on Monday, following a downgrade by global brokerage firm Nomura, which revised its rating to ‘neutral’ from ‘buy’ and cut the price target to Rs 2,644 from Rs 3,242. The revised target is nearly in line with Friday’s closing price of Rs 2,660.20.
The stock saw a sharp selloff, wiping out Rs 249.20 in early trade, as Nomura flagged heightened risks associated with the company’s strategic entry into the truck and car radial (TBR/PCR) tyre market—segments known for intense competition and thinner margins.
Nomura cautioned that entering these new segments, dominated by well-established players, would likely require higher upfront investments in branding and distribution networks. It also warned that the expansion may compress blended EBITDA margins to 22–23%, compared to the company’s historical margin range of 26%, and could lower Return on Equity (RoE) by 200 basis points.
Although Nomura’s earnings estimates for FY26/FY27 remain unchanged, it sees valuation multiples moderating to 12x–16x from the earlier 14x–18x, due to expected return dilution from the shift into lower-margin markets.
The brokerage note also cited macro and industry-level risks such as:
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Slower-than-expected demand recovery in the off-highway tyre market
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Input cost inflation
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Difficulty in passing on higher costs in competitive segments
Nomura currently prefers Ceat over Balkrishna Industries in the tyre sector, citing a more favorable risk-reward profile.
As of today, Balkrishna Industries holds a market cap of Rs 462.84 billion, with a P/E ratio of 26.10 and a dividend yield of 0.67%.
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