JK Tyre Surges 4% as Q1 Net Surges Twofold

Shares of JK Tyre rose as much as 4 per cent on Wednesday after the tyre maker’s net profit doubled in the June quarter. JK Tyre’s consolidated net profit jumped to Rs 118 crore in the first quarter ended June 30.

JK Tyre benefitted from a drop in raw material cost as crude oil prices have fallen sharply. Crude-based derivatives are used for making tyres, accounting for a significant part of input cost.

The tyre-maker’s profit from operations before other income, finance costs and exceptional items rose sharply to Rs 253 crore in the June quarter, from Rs 153 crore in the year-ago quarter.

Arun K Bajoria, president and director of JK Tyre, also attributed the higher profitability to better product mix. “Our share of product mix ratio of radial and bias tyres has increased to 50:50. Earlier it used to be 65 per cent bias tyres and rest radial tyres,” he said.

Mr Bajoria also said that it is looking to enter two-wheeler and three-wheeler segments.

Net sales of the company, however, declined to Rs 1,759.91 crore in the first quarter compared with Rs 1,853.92 crore in the same period last year.

Market analyst G Chokkalingam said JK Tyre is one of the most undervalued stock in the tyre pack. He sees strong short-to-medium term upside in the stock.

Shares of JK Tyre ended 2.7 per cent higher at Rs 119 as compared to a 0.50 per cent gain in Sensex. (With Agency Inputs)