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JK Tyre & Industries plans INR 1400 crore investment for capacity boost, following a stellar quarter with tripled net profit.
In a strategic move to meet the increasing demand for its products, JK Tyre & Industries is gearing up for a substantial investment of INR 1400 crore over the next two years. Anshuman Singhania, the Managing Director at JK Tyre & Industries, shared insights, revealing the company's plans to invest fresh capital.
Singhania disclosed that the company is currently utilizing 85% of its available capacity. To address this, they are in the final stages of an INR 800 crore investment cycle aimed at enhancing existing capacity at their facilities. Simultaneously, JK Tyre & Industries is eyeing an additional investment of INR 1400 crore to further increase the production and solidify its leadership in radial tires.
The decision comes on the heels of a remarkable financial quarter for the company. In the three months ending December 31, 2023, JK Tyre & Industries witnessed a nearly threefold increase in net profit, reaching INR 227 crore. This rise can be attributed to increased sales, a more favorable product mix, and the optimization of their product range.
With a focus on the local market, the company aims to expand capacity to meet the rising demand for truck, bus, and passenger car radials. The net revenue for the quarter stood at INR 3,700 crore, marking a 2% increase over the same period the previous year. Notably, JK Tyre & Industries successfully reduced its net debt by 24% to INR 3,456 crore from March 2023 levels.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) recorded substantial growth, rising by 61% to INR 563 crore. The EBITDA margin for the quarter stood at 15.2%. The Chairman and Managing Director, Raghupati Singhania, expressed confidence in the optimistic demand outlook, driven by strong economic activity and positive consumer sentiments.
Despite the positive momentum, the CMD acknowledged the global challenges, especially geopolitical disturbances affecting exports during the quarter. Currently, exports contribute 15% to the company's revenues. In response to the promising financial outlook, JK Tyre & Industries successfully raised INR 500 crore through a Qualified Institutional Placement (QIP) in December 2023.
In recognition of the company's stellar performance, the Board declared an interim dividend of Re 1 per equity share (50%), each having a face value of INR 2 per share. This move reflects the company's commitment to rewarding its shareholders in league with its impressive financial achievements.
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As JK Tyre & Industries positions itself for further growth and market leadership, these strategic investments and financial moves underscore the company's dedication to meeting the evolving demands of the industry.
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