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Key Highlights:
JK Tyre & Industries, the flagship company of the JK Organisation, recorded a strong 33% year-on-year (YoY) increase in net profit to Rs 212 crore in the first quarter of the current fiscal year.
The company's focus on premiumization, combined with successful price pass-through of raw material cost rises and an increase in exports and replacement demand, has been the key factors of this expansion.
While JK Tyre's net profit surged, its operating revenue fell 2% year on year to Rs 3,655 crore. This might be attributed to a decrease in demand from original equipment manufacturers (OEMs), which currently account for 21% of the company's sales, down from 23% in FY24.
In contrast, the replacement market has grown significantly, accounting for 62% of the company's revenues in Q1 FY25, up from 61% in FY24.
One major highlight is the company's export performance, which increased to 17% of total sales in Q1 FY25 from 16% in FY24. Key markets such as the Americas, Brazil, Europe, the Middle East, and Asia have experienced tremendous growth.
Export Growth
JK Tyre's export business has shown robust growth, accounting for 17% of total sales in Q1 FY25, up from 16% in FY24. Key markets including the Americas, Brazil, Europe, the Middle East, and Asia have significantly contributed to this upward trend.
Management Insights
Anshuman Singhania, MD of JK Tyre, highlighted positive traction in export markets, particularly in the Americas and Europe, with fresh demand picking up post-inventory adjustments. He expressed satisfaction with the company's performance in these regions.
Market Outlook
Addressing the domestic market scenario, Singhania noted a temporary slowdown in commercial vehicle demand due to recent elections. However, with the elections concluded, he anticipates a revival driven by infrastructure projects, rural market developments, favorable monsoon conditions, and the upcoming festive season.
Raw Material Challenges
Anuj Kathuria, President (India) of JK Tyre, acknowledged a 3-4% quarter-to-quarter increase in raw material costs, particularly natural rubber. Despite this, the company has successfully passed on these cost increases to customers, maintaining healthy margins.
Industry Context
India's automotive tyre sector plays a crucial role in the economy, supported by a mix of organized and unorganized players. The market is witnessing steady growth, driven by rising vehicle ownership, infrastructure expansion, and increasing consumer spending.
However, challenges such as fluctuating raw material prices, competitive pressures, and stringent regulatory norms persist.
Also Read: Continental Tires Opens Flagship Dealership in Bengaluru
CMV360 Says
JK Tyre's impressive financial results show that the company is handling market challenges well. Their strategy of focusing on premium products and managing costs effectively is paying off. This positions JK Tyre for continued success both in India and abroad.
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Delente Technologies Pvt. Ltd.
M3M Cosmopolitan, 12th Cosmopolitan,
Golf Course Ext Rd, Sector 66, Gurugram, Haryana
pincode - 122002
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