Balkrishna Industries Receives 'Buy' Rating from MarketsMOJO, Shows Strong Fundamentals and Potential for Long-Term Growth

Balkrishna Industries, a leading player in the tyre and allied industry, has recently received a 'Buy' rating from MarketsMOJO. This upgrade comes as a result of the company's high management efficiency, with a ROCE of 17.29%, and its strong ability to service debt, with a low Debt to EBITDA ratio of 0.63 times.
In addition, the company has shown positive results in the quarter ending June 2024, with its operating cash flow at a record high of Rs 2,082.64 crore and net sales at Rs 2,714.50 crore. Its operating profit to interest ratio is also at a high of 30.27 times.

From a technical standpoint, the stock is currently in a bullish range and has shown improvement in its trend from mildly bullish to bullish on 19-Sep-24. Multiple factors, such as MACD, Bollinger Band, and KST, also indicate a bullish outlook for the stock.

One of the key strengths of Balkrishna Industries is its high institutional holdings at 35.05%. These investors have better capability and resources to analyze the fundamentals of companies, giving them an edge over retail investors. In fact, their stake in the company has increased by 0.73% over the previous quarter.

With a market cap of Rs 59,774 crore, Balkrishna Industries is the largest company in the sector, constituting 33.15% of the entire industry. Its annual sales of Rs 9,924.02 crore also make up 10.54% of the industry.

However, there are some risks associated with investing in Balkrishna Industries. The company has shown poor long-term growth, with its operating profit growing at an annual rate of only 2.00% over the last 5 years. Additionally, with a ROCE of 15.2, the stock is currently trading at a very expensive valuation, with a 5.9 Enterprise value to Capital Employed.

Despite these risks, the stock is currently trading at a discount compared to its average historical valuations. Over the past year, while the stock has generated a return of 22.65%, its profits have risen by 50.6%, resulting in a PEG ratio of 0.7.

In the last 1 year, Balkrishna Industries has underperformed the market, with a return of 22.65% compared to the market (BSE 500) returns of 40.49%. However, with its strong fundamentals and positive outlook, the stock has the potential to deliver good returns in the long run. Investors should consider adding Balkrishna Industries to their portfolio for long-term growth.