JK Tyres Q4FY23 PAT up 2.5X at Rs108 crore on lower rubber prices boosting operating margins

JK Tyres reported 9.7% higher revenues for the March 2023 quarter on consolidated basis at Rs3,632cr on robust OEM demand. Sequential revenues were up 0.54%. The demand got a boost from the growth of the automobile sector, especially the OEM demand for tyres from the entire spectrum of automobiles. In terms of geographical spread of revenues, the India revenues were up 8.8% while revenues from Mexico were up 14.5% yoy in Q4FY23.

Operating profits saw a huge thrust of 150% in the India tyre business while the Mexico business reported lower operating profits on a yoy basis. The big thrust to the company came from lower prices of rubber and carbon black, both key inputs for the manufacture of tyres. This led to a 4-fold growth in the operating profits in the quarter and an expansion of the operating margins from 1.17% to 4.34% in Q4FY23.

Financial highlights for Mar-23 compared yoy and sequentially

JK Tyres

Rs in CroreMar-23Mar-22YOYDec-22QOQ
Total Income (Rs cr)₹ 3,632₹ 3,3129.68%₹ 3,6130.54%
Operating Profit (Rs cr)₹ 158₹ 39306.50%₹ 12724.26%
Net Profit (Rs cr)₹ 108₹ 40169.60%₹ 6665.24%
      
Diluted EPS (Rs)₹ 4.37₹ 1.63 ₹ 2.66 
OPM4.34%1.17% 3.51% 
Net Margins2.98%1.21% 1.82% 

 

The 2.5X growth in net profits was driven by robust demand growth from the OEM segment and lower input costs. Net margins improved sharply from 1.21% to 2.98% on a yoy basis. The company has also recommended a dividend of Rs2 per share to shareholders. Cash flows from operations for FY23 surged nearly 4 fold to Rs1,224 crore on working capital efficiencies in the quarter.

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