Balkrishna Industries has fallen by 20% since the recent market correction.
Reasons for the fall 1. the weak market sentiment as well as the muted prospects for topline growth in the short-term.
2. Volumes have been under pressure as demand from the US and Europe is subdued.
However, the company's margins have received a boost due to falling prices of crude oil, carbon black, and rubber. The company is also in the process of repaying debt on the balance sheet. The management has stated that the target is to be debt free by FY19. The company recently commissioned its new plant in Bhuj which, due to its proximity to the port, will help lower freight costs.
At current levels, the stock is trading at 10.5 times FY18 earnings. Existing Investors can hold on to Balkrishna Industries Ltd with FY18 target price of Rs 834.
