Radialisation trend catching up fast…
JK Tyre & Industries Ltd (JK Tyre) has been in the business of manufacturing and selling tyres since its inception in 1977. Further, JK Tyre derives 86%/14% of its revenues from Indian/Mexican markets. It commands a dominant market share of 28% in truck tyre segment.
Given JK Tyre’s dominant position in TBR segment coupled with robust brand equity, we expect revenue to grow at a CAGR of ~10% over FY17-19E. However, PAT is expected to grow at a CAGR of ~19% on account of low base effect. We initiate JK Tyre with a ‘BUY’ rating with a TP of Rs183 at 6.5x FY19E EPS.
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