JK Tyres shares jump 14% on strong Q2 results; board approves capex plan of ₹1,025 cr

Shares of tyre manufacturer JK Tyres surged as much as 13.9% to hit a 52-week high of ₹351.05 apiece on the BSE, a day after the company reported a 401.1% jump in net profit to ₹248.62 crore in the July to September quarter of FY24 as against ₹49.61 crore in the same period last year. The company's board of directors also approved the capacity expansion plan worth ₹1,025 crore in the next two years.

During the session on Thursday, the scrip opened higher at ₹351.05 as against the previous closing price of ₹308.10. At 10:58 a.m, the share price of the tyre manufacturer was trading 9.87% higher at ₹338.75. This is in line with the broader BSE Sensex, which was trading 0.66% or 421.93 higher at 64,013.26.

In the first two hours of the trading session, the company’s market capitalisation stood at ₹8,406.32 crore with more than 6.33 lakh shares exchanging hands as against the two-week average of 1.13 lakh shares. In the past one month, three months, and one year, the share price of the tyre manufacturer has given 22.44%, 33.71% and 96.87% in returns, respectively.

According to the company, the company has an existing capacity of 155.11 lakh tyres per year. The company has 12 manufacturing facilities across India and its capacity utilisation currently stands at 95%. The company has proposed a capacity addition of 19.45% by October 2025 with a capital investment of ₹1,025 crore. The company plans to fund the investment through equity/internal accruals and debt. “Indian auto industry is witnessing good growth, which is expected to continue for some time. Hence an opportunity to increase the company's market presence further in the automotive tyre market,” says the company.

Meanwhile, the board of directors of the tyre manufacturer also approved plans to raise ₹500 crore in one or more tranches via “qualified institutional placement or other permissible mode,” according to the company.

During the quarter under review, the company’s revenue from operations surged 3.7% to ₹3,897.53 crore, as against ₹3,756.52 crore in the same period last year. The company’s EBITDA (earnings before interest, tax, depreciation and amortization) witnessed a surge of 98% year-on-year to ₹589 crore as against ₹297.4 crore in the same period last year.

"JK Tyre continues its robust performance in Q2FY24 driving revenues with a multifold increase in profitability. The sustained thrust on larger market presence enabled boost volumes across segments and product categories. The strategic focus on the enrichment of product mix across the entire Radial range, PCR/LTR/TBR has had positive outcomes. Cost compression and the ongoing efforts to enhance internal efficiencies remain the bedrock of our operations," says Raghupati Singhania, CMD, JK Tyres.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)