JK Tyre and Industries Ltd. reported a fivefold surge in its Q2 net profit year-on-year, reaching Rs 248.6 crore ($33.3 million), surpassing analysts' expectations. This growth was primarily driven by cost reductions. The company also witnessed a 3.8% increase in revenue, amounting to Rs 3,897.5 crore ($522 million), while EBITDA soared by 98% to Rs 589.1 crore ($79 million). The margin hit a notable 15.11%.
In addition to the impressive financial performance, the company's board has approved a project for expanding tyre manufacturing capacity with a Rs 1,025 crore ($137 million) investment. This initiative is expected to boost capacity by 19.45%, from the current utilization of 95%. The expansion will be financed through equity, internal accrual, and debt.
The aim of this expansion is to strengthen JK Tyre's position in the automotive tyre market as the Indian auto industry continues to grow rapidly. To support this growth strategy, the board has also approved raising Rs 500 crore ($67 million) via qualified institutional placement.
Following these developments, JK Tyre's shares closed up by 1.87% at Rs 310 ($4.16), outperforming the benchmark Nifty 50 which declined by 0.47%.
InvestingPro Insights
Based on real-time data from InvestingPro, JK Tyre and Industries Ltd. is a prominent player in the Automobile Components industry, trading at a low P/E ratio relative to near-term earnings growth. This potentially makes it an attractive investment opportunity.
InvestingPro Tips also highlight the company's strong earnings, which have enabled management to maintain dividend payments for an impressive 17 consecutive years. This is a testament to JK Tyre's financial stability and commitment to rewarding its shareholders.
For those interested, InvestingPro has a wealth of additional tips and insights on JK Tyre and Industries Ltd., as well as other companies in the sector. These can provide valuable guidance for investors looking to make informed decisions.
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