JK Tyre and Industries reported a significant profit growth of 56.2% year-on-year, reaching INR 169.33 crore in the fourth quarter of FY23, compared to INR 108.38 crore in the same period last year. Raghupati Singhania, CMD of JK Tyres, stated that the company’s profit after tax of INR 811 crore includes a provision of INR 106 crore for EPR liabilities. The EPR costs, which are imposed by the Indian government on the tyre industry, will be passed on to customers, leading to an initial price hike of 0.6% to 0.7%.
The company's Board recommended a final dividend of INR 3.50 per equity share of INR 2 each (175%) for the financial year ending March 31, 2024. This is in addition to the interim dividend of INR 1.0 per equity share of INR 2 each (50%) already paid, bringing the total dividend to INR 4.50 per equity share (225%) for the financial year.
Revenue from operations increased by 1.8%, totaling INR 3,698.45 crore, up from INR 3,632.47 crore in the corresponding quarter of the previous fiscal year. The board has decided to announce a dividend of 225% including an interim of 50% which was announced a couple of months earlier.
Analysts have reported an increase in the prices of natural rubber, which is a crucial raw material for tyre manufacturers. This price rise has occurred during the January-March period, traditionally known as a robust quarter for the tyre industry with a turnover exceeding USD 11 billion.
Meanwhile, the sales of vehicles in India increased by over 20% year-on-year during the three months ending on March 31. This growth has been beneficial for auto parts manufacturers such as JK Tyre and Industries.
Increase in raw material prices
Raw material prices have been increasing since Q3FY24, potentially causing further price hikes of 3% to 4% this quarter and an additional 3% to 4% over the next three quarters. JK Tyre had already implemented a 1.5% price increase and plans to implement further price adjustments as needed.
JK Tyre achieved record sales and profits in FY2024, with sales at INR 15,046 crore and a PAT increase of 3X. The company declared a total dividend of INR 4.50 per equity share for FY24, including an interim dividend of Re 1 per equity share already paid.
Singhania highlighted, "Our strong performance is a result of our unwavering focus on product premiumisation, expanding market reach and implementing technology-enabled manufacturing and digitalisation across operations to enhance efficiencies. Additionally, our strategic initiatives to strengthen our balance sheet through equity infusion have been successful, bolstering our financial resilience."
The tyre company reported that its exports remained flat during the year due to geopolitical disruptions, including increased freight costs. However, the company anticipates improving its export volumes in the coming quarters. In FY24, JK Tyre raised INR 500 crore through a Qualified Institutional Placement (QIP), which helped deleverage its balance sheet.
The company remains optimistic about the tyre demand outlook, driven by robust infrastructure spending and buoyant economic activities, which will help them move toward the vision of becoming a green and trusted mobility partner.
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