JK tyres has reported an exceptional quarterly results. Higher demand for tyres coupled with lower rubber prices and excise resulted in a
net sales growth of 7.7% yoy in Q2FY10. Significantly lower YoY material prices helped JKT post an EBITDA of Rs1369.4mn against a loss of Rs 50.4mn in corresponding quarter of previous year. EBITDA margins for quarter stood firm at 14.5% which is 304 basis points higher sequentially.
The management has indicated that its 100% subsidiary Tornel is reviving at a fast pace. For the 9 months ended September 09, Tornel has posted sales of about $135-140mn and net profit after tax of about $11-13mn.
Already the company has posted earnings of Rs24.4. Strong demand for tyres from both OE as well as replacement market has helped the tyre makers shore up utilization levels.
The stock is trading at very low P/E. One can BUY the stock.
