Balkrishna Ind Profit Slumps 40% In June Quarter On Higher Costs

Balkrishna Industries Ltd. posted a 40.0% on-year drop in net profit for April–June as a sharp fall in other income and a rise in expenses dragged earnings below expectations.

Net profit stood at ₹2,870.0 million, down from ₹4,770.0 million a year ago and ₹3,630.0 million in the previous quarter, missing the Street estimate of ₹4,100.0 million.

Revenue rose 2.6% on year to ₹27,600.0 million from ₹26,890.0 million, marginally below the expected ₹27,920.0 million. Sequentially, revenue was flat from ₹27,460.0 million.

Other income fell 34.6% to ₹1,040.0 million from ₹1,590.0 million. Total expenses rose 11.3% on year to ₹24,730.0 million from ₹22,210.0 million, led by a 24.0% rise in other expenses to ₹7,880.0 million.

Raw material costs, which make up half of total expenses, dropped 2.0% to ₹12,500.0 million. Depreciation and amortisation increased 15.1% on year to ₹1,860.0 million.

Net profit margin narrowed to 10.0% from 17.4% a year earlier. The company said profit was hit by a ₹1,540.0 million mark-to-market loss due to a sharp increase in forex rates, compared to a gain last year. Higher depreciation also impacted the bottom line.

EBITDA for the quarter was ₹6,550.0 million, down 8.0% on year and lower than the estimate of ₹7,000.0 million. The EBITDA margin fell 228 basis points to 23.8%. The decline was due to lower volumes, a higher share of domestic sales, and the impact of US tariffs.

Sales volume for the quarter fell 3.0% on year to 80,664 tonnes. Europe accounted for 38.4% of volumes, down from 45.1% in the previous quarter, while India’s share jumped to 35.0% from 28.6%. The Americas contributed 17.0%.