JK Tyre & Industries (530007) Q2 24/25 earnings summary

Executive summary

• Consolidated Q2 FY25 revenue was ₹3,643 crore, down 7% YoY, with muted domestic volumes and flat exports YoY but sequential export growth in high single digits.

• Q2 FY25 EBITDA margin contracted to 12.2% from 14.1% in the previous quarter, mainly due to a 6%-7% sequential increase in raw material costs; Q2 EBITDA was ₹443 crore, down 26% YoY.

• Q2 FY25 profit after tax was ₹144 crore, down 42% YoY; cash profit stood at ₹323 crore, both lower YoY.

• Board approved merger/amalgamation of Cavendish Industries Limited into the parent company, aiming for synergies, cost benefits, and value unlocking; expected completion in 10-12 months.

• Compulsorily Convertible Debentures of ₹240 crore converted into equity shares in September 2024.

Financial highlights

• Q2 FY25 consolidated exports rose 6% YoY to ₹693 crore; standalone turnover was ₹2,533 crore, down 6% YoY.

• Cavendish Industries posted ₹957 crore in revenue and ₹123 crore EBITDA (12.9% margin).

• JK Tornel, Mexico, reported sales of MXN 1,342 million (₹593 crore), down 8% YoY in constant currency; EBITDA margin at 8%.

• Net debt increased to ₹4,340 crore as of September 2024, up from ₹3,704 crore in March 2024, due to working capital needs.

• Q2 FY25 consolidated EPS was ₹4.93; H1 FY25 EPS at ₹12.64.

Outlook and guidance

• Demand is expected to improve in H2, driven by festive season, resumption of government infrastructure spending, and normalization of industrial activity.

• Capacity expansions in PCR and TBR are expected to be fully commissioned by H2 FY26, with ramp-up over the following quarters.

• Management expects to reduce net debt by ₹1,500 crore over the next two years.

• Focus on sustainable growth, product innovation, and expanding global presence.

• Continued investment in R&D and green technology to enhance profitability and market share.