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JK Tyre - 3QFY2011
JK Tyre reported a mixed set of results with a strong top-line growth; however, the bottom
line was down significantly. Net sales during the quarter reported robust 47% yoy growth to
`1,179cr (`802), in line with our estimates of `1,172cr. On the operating front, the company
posted a 36% yoy and 11.5% qoq decline in operating profit to `62cr (`97cr) for
3QFY2011. Operating margin dipped by substantial 681bp yoy and 89bp qoq, primarily
due to unabated and unprecedented spurt in rubber prices, leading to a substantial 901bp
yoy increase in raw-material cost at 71.3% (62.3%) of sales in 3QFY2011. However, margin
erosion was arrested due to a 175bp and 40bp yoy reduction in staff cost and other
expenditure, respectively. Net profit dipped by 75% yoy and 55% qoq to `9cr (`37cr) for the
quarter, against our estimates of `16cr, primarily on account of margin contraction. At `120,
the stock is trading at 3.9x FY2011 and 3x FY2012 earnings. Currently, the stock rating is
under review and we shall revise our numbers post the conference call with the management
and come up with a detailed result update.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
JK Tyre - 3QFY2011
JK Tyre reported a mixed set of results with a strong top-line growth; however, the bottom
line was down significantly. Net sales during the quarter reported robust 47% yoy growth to
`1,179cr (`802), in line with our estimates of `1,172cr. On the operating front, the company
posted a 36% yoy and 11.5% qoq decline in operating profit to `62cr (`97cr) for
3QFY2011. Operating margin dipped by substantial 681bp yoy and 89bp qoq, primarily
due to unabated and unprecedented spurt in rubber prices, leading to a substantial 901bp
yoy increase in raw-material cost at 71.3% (62.3%) of sales in 3QFY2011. However, margin
erosion was arrested due to a 175bp and 40bp yoy reduction in staff cost and other
expenditure, respectively. Net profit dipped by 75% yoy and 55% qoq to `9cr (`37cr) for the
quarter, against our estimates of `16cr, primarily on account of margin contraction. At `120,
the stock is trading at 3.9x FY2011 and 3x FY2012 earnings. Currently, the stock rating is
under review and we shall revise our numbers post the conference call with the management
and come up with a detailed result update.
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