BALKRISIND — earnings call
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Prepared remarks
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
MR. SUSHIL MISHRA – HEAD, ACCOUNTS
SGA, INVESTOR RELATIONS ADVISORS · Management
Balkrishna Industries Limited July 30, 2026
Moderator · Conference Operator
Ladies and gentlemen, good day, and welcome to the Balkrishna Industries Limited Q1 FY '27
We have our first question from the line of Raghunandhan from Nuvama Research.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Congratulations Rajiv sir and to the entire team.
Firstly, in the Off-Highway segment, India, Europe, America are showing improvement.
Can you highlight current market share in these markets and specific efforts you are focusing on to increase share?
Also, please share dealer inventory levels, whether they are normal or higher than normal levels, given the uncertain environment.
Rajiv Poddar
So India, market share is around close to 18%, 19%.
U.S. is about 3% to 4%.
And we are working to improve this.
The end user levels of inventories are normal, there is no buildup or there is no shortage at the moment.
So it's a normal buildup.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
And the Europe will be above 8% market share, that would be a fair estimate?
Rajiv Poddar
Roughly around that region, yes.
Maybe 7% to 8%...
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
For Q1, can you indicate the commodity impact and the price hike, which was taken?
Also, if you can indicate the expectation of commodity inflation impact in Q2 and how much more price hikes you are planning?
Balkrishna Industries Limited July 30, 2026
Rajiv Poddar
So we have taken on a price hike of about 5% scattered across the various parts of the quarter, you will see the full pass-through coming in this quarter.
Going forward for the price hikes, we are yet working on the market scenario.
We have not yet announced anything further than that at the moment.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
And raw material basket or commodity inflation for Q1 and Q2, how much would that be?
Because some of the mass market companies have indicated impact of, as high as, more than 20% raw material basket increase?
Madhusudan Bajaj
So partly it has come already in Q1, and the partly will come in Q2 and some will go in the Q3 also.
Around 5% on raw material will be in the Q3, which will be impacting on our sales price approximately 3%.
And partly of that will be offsetted by the price increase already taken by us, which will be fully applicable on this quarter.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Just a clarification, 5% of revenue will be the impact in Q2...
Madhusudan Bajaj
The raw material price has increased by 5% on the cost basis of the raw material.
The impact on the sales price is approximately 3%.
Out of that, we are expecting it may impact 2% of our margins in the coming quarter.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Coming quarter.
Understood, sir.
And just the last question.
For FY '27, what is the hedge rate for EUR-INR?
You started the year with INR102, whereas spot price is higher at INR110.
For full year FY '27, should we get a better rate?
I mean, it can also act as a support to your margin.
Rajiv Poddar
We are expecting a better rate, but we do not share the exact rates.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Noted, sir.
And can you share Q1 freight rate as cost of revenue and freight rate as percentage of revenue?
Rajiv Poddar
Around 5%...
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
It used to be around 5%.
Moderator · Conference Operator
We have our next question from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities.
Mumuksh Mandlesha Just firstly, sir, on the Europe demand this quarter was a good growth.
Just can you elaborate more what is driving the improvement in demand?
And do you expect a good double-digit growth to continue for the rest of the year, sir?
Rajiv Poddar
So to begin with, the base last year was lower.
So that is one thing.
And then, of course, they have had a good monsoon good season, which is also impacting their agricultural segment.
Mumuksh Mandlesha Got it, sir.
And sir, just any update on the refund of the U.S. duty, sir?
Anything came this quarter, sir?
Too early to share details on that.
We'll keep you posted as and when things progress.
Balkrishna Industries Limited July 30, 2026 Mumuksh Mandlesha Got it, sir.
And finally, sir, on the capex side, what is the estimate for this year, sir?
Around additional about between INR1,500 crores to INR2,000 crores.
Mumuksh Mandlesha So totally around INR2,500 crores and INR3,000 crores, right, so full year.
Yes.
Moderator · Conference Operator
The next question is from the line of Siddhartha Bera from Nomura.
Siddhartha Bera
Congrats on a good set of numbers.
Sir, first question on Europe.
So while we see that the last year's base was quite weak and we did grow strongly in the first quarter.
But increasingly, I think there are -- there's talks about the adverse heat waves impacting the crop.
So do you see any risk to this growth with this adverse weather because in the past we had seen sometimes impact from these events.
Rajiv Poddar
It's too early to get back to -- I mean to take a call whether it would have an impact because they've also had a good monsoon to counter that.
So too early to make those kind of comments.
Siddhartha Bera
Understood.
And in terms of the freight increases, have we seen the entire impact of the freight increase in the current quarter?
Or do you think the freight rates can move up further in the coming quarters, and you need to maybe pass it on also with the price hike?
Rajiv Poddar
There will be some part which will -- I mean, if the scenario continues like this, we had a dip in the middle and then again back up, we thought it would have subsided.
But if the scenario continues, there may be some increase which will come across, and we will see how best we can pass it on.
Siddhartha Bera
Okay.
So as of now, the visibility is that it remains at similar level as in first quarter.
You don't see any big change now in the current quarter?
Rajiv Poddar
We may see some change if the scenario continues the way it is now with the stop in the peace process.
So we may see some impact coming.
Siddhartha Bera
Okay.
Understood.
And sir, lastly, on the capex side, did you mention for this FY '27, we will have about INR3,000 crores of total capex spend.
Rajiv Poddar
Yes, INR1,000 crores already spent and between INR1,500 crores to INR2,000 additional to be spent in this financial year.
Siddhartha Bera
Okay.
And in the past, we had shared, I think, about maybe about INR4,000 crores over the next 3 years in terms of capex.
Does that mean a large part is front ended and it should come down meaningfully next year?
Or how do you see the capex spends now given this plan?
Rajiv Poddar
Yes.
I mean if you put the numbers together, you will come to that conclusion.
Total INR3,000 crores is left to spend.
And if we are spending INR1,500 crores to INR2,000 crores in this financial year, balance would be, of course, descending.
Balkrishna Industries Limited July 30, 2026
Siddhartha Bera
Understood.
Understood.
Got it, sir.
And lastly, on the India business, I mean, India Off- Highway business also has, I would say, grown very substantially in the last few years.
Do you see further scope of increase.
I mean, On-Highway will be an added factor now to India, also, we understand.
But if I just keep that aside and if I look at only the Off-Highway segment, do you see there is possibility of much stronger growth continuing even in this segment also for India in the next few years?
Rajiv Poddar
Yes.
Siddhartha Bera
Any idea, sir, where it is coming from?
Is it market share gains?
Or is it more about product gaps which we were not serving earlier.
Some color there about how and why it is coming through?
Rajiv Poddar
So you'll have to break this down into 2 parts.
If you look at it as a percentage base, if the exports pick up the way they used to be, then you will see the numbers come down.
But overall, on a stand-alone actual number basis, India will continue to grow.
There are yet pockets which we are within the Off-Highway space, which we need to cater to which we are working and moving in that direction.
So it's a mix of product mix and mix of new segments within the Off-Highway space, which we are not catering to.
Moderator · Conference Operator
We'll move on to the next question from line of Krish Mehta from Enam Holdings.
Krish Mehta
Congratulations on a great set of numbers.
So I just had a clarification on the capex.
If we look at the plan until 2030 to get INR23,000 crores of top line, what would the total capital expenditure be, just to clarify on that?
Rajiv Poddar
capex is INR6,800 crores.
Out of that, we have spent roughly INR3,800 crores, INR3,000 crores is balance.
Out of that, we are estimating in this financial year to spend between INR1,500 crores to INR2,000 crores.
Moderator · Conference Operator
We have our next question from the line of Vijay Pandey from Axis Capital.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Yes.
Sir, I wanted to understand about the dynamics in play, especially on the Indian business side because we have recorded very significant growth over the last 3 quarters in India, particularly coming from the agricultural segment.
But then also like our OE mix is remaining broadly the same.
So just want to understand how the tractor business and what is driving this growth?
And how do we see this growth going forward?
Is it coming from the tractor business?
Or is it coming from the construction and infrastructure business?
Can you please help us with that?
Rajiv Poddar
It's coming from all the sectors, industrial construction as well as agri.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Okay.
And is it also replacement or on the OE side, is it a combination of both…
Rajiv Poddar
Replacement side.
Also on the mining sector is also helping us aid this growth.
Balkrishna Industries Limited July 30, 2026
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
I wanted to understand, was there any prebuying from the dealers in case of Europe because of the price increases?
I think one of the peers highlighted that there was some prebuying happening in Europe.
So just wanted to understand on that?
Rajiv Poddar
No, we don't see any prebuying in the sense the level that -- as I mentioned earlier, the levels are normal.
So we don't see that.
If somebody is done, it would be very minimal in our knowledge.
Moderator · Conference Operator
The next question is from line of Yash Agrawal from Nirmal Bang.
Yash Agrawal
My first question is on the U.S. market.
So have customers started building inventory following tariff-related disruption?
So are you seeing any meaningful change in the competitive intensity and since the overall share of U.S. has gone down to around 11% and 12% in overall revenue share, so can we expect this to again increase to around 15%, 16% that was there historically.
Rajiv Poddar
So as I mentioned in my opening remarks, in the U.S.A., we expect the markets to go back to, as you rightly said, 15%, 16%.
And we see -- I'll repeat my opening statement remarks where I made a statement in Americas, we have a long runway of growth in times to come, given the brand positioning and focus on high-quality products for that market.
So we expect this to be a growth area for us.
Yash Agrawal
And also like the U.S. share increases, but on the domestic side, On-Highway tire scale up, how should investors think about margin profile like core OHT businesses going forward in the next few quarter
Rajiv Poddar
So under the current volatility, we can't make any comments on future going statement.
Yash Agrawal
Sir, last question is majorly on the capex.
As the major capex cycle will behind after this year, so should we expect from FY '28 stronger free cash flow generation and higher capital return?
Rajiv Poddar
I can't comment on those things because Board has to take decisions on whatever the Board decides.
Moderator · Conference Operator
We have our next question from the line of Lokesh Manik from Vallum Capital.
Lokesh Manik
Rajiv, my first question was on gross margins.
Apart from raw material, is there any other impact?
Because channel sales OEMs have increased quite a lot this quarter.
So I'm assuming they are a little lower margin compared to replacement.
Is there any impact on the margins from there apart from raw material?
Rajiv Poddar
No, no.
Lokesh Manik
Yes, I'll just repeat the question.
I was wanting to understand if you have got some -- you alluded to positioning yourself as a service provider more than product from a differentiation perspective.
So just trying to understand from the feedback that you've got, how much weightage does service carry when a customer is deciding when to buy a tire, a 2-wheeler tire in his decision-making, how much weightage does service carry?
Would you have some feedback on Balkrishna Industries Limited July 30, 2026 that from your marketing team, which is helping you differentiate more on the service rather than apart from also product?
Satish Sharma
Yes.
Thank you, Lokesh.
And I'm glad that in the end, you said also product because otherwise, I would have probably started off...
Lokesh Manik
That is number one.
We don't doubt, BKT on that.
That is assumed.
Satish Sharma
Thank you for that confidence on the product side.
Yes, over and above the product differentiation, this is a unique experiment that we have done in the sense that we want to stay with the life cycle of the customer.
So we don't want to forget that once he's bought our product and we are off his mind space.
And therefore, we said that we can -- your rides in the years to come so long as you're on our product, we are by your side.
Lokesh Manik
It's a customer life cycle management in that sense.
Satish Sharma
The response to this, I would say, is quite good.
The number of customers opting for this offer is matching our expected expectations.
And therefore, I think it will only go from strength to strength.
So the early response is pretty strong.
Moderator · Conference Operator
We have our next question from Basudeb Banerjee from CLSA.
Basudeb Banerjee
I was asking that great to see India revenue mix being even higher than Europe revenue mix for the first time in a quarter. and we can see tractor industry wholesales are up almost 25% year- to-date.
So what resulted in this almost 35% plus India revenue growth?
Was it industrial agri equally?
Or it was more of sustainable carbon black revenue addition on a continued basis?
Rajiv Poddar
This was mainly from the Off-Highway space of tire market.
Basudeb Banerjee
And with the -- so you mean industrial?
Rajiv Poddar
Both.
All 3, agri, mining and industrial construction.
Basudeb Banerjee
That's great to hear.
So more of sustainable directionally rather than something one-off as well.
And earlier, you recollect when you used to say when India mix used to be sub 20% that India margins used to be relatively lower than the export margin.
So now how that progress has been happening?
Is it pricing directionally improving?
Or how the margin differential is panning out now?
Rajiv Poddar
As I said in my opening remarks, it is marginally lower, and that has had an impact, but it is marginally lower, not as low as it used to be earlier.
Moderator · Conference Operator
We have our next question from the line of Yohan Khinvasara from Asian Broking.
Balkrishna Industries Limited July 30, 2026
Yohan Khinvasara
So first of all, congratulations on a great set of numbers.
Regarding the U.S. tariffs, they started refunding quite a lot of the tariff money.
So I was just wondering whether we have applied for some of these refunds and have we initiated the process?
Rajiv Poddar
Yes.
As all companies have, we have, but it's too early to make comments on when the returns and all are going to come.
Yohan Khinvasara
So we've already started applying for the refund, right?
Rajiv Poddar
Yes sir.
Moderator · Conference Operator
We have a next question from the line of Raghunandhan from Nuvama Research.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Question to Satish, sir.
Sir, if you can talk about the on-road efforts, how do you see this year, FY '27 and '28?
Annual report indicates that 70 distributors have been added.
How many more additions are required?
What would be the market coverage?
How do you see the target in terms of increasing the coverage and also the brands which you have launched in trucks and 2-wheelers, Loadxpert, Milexpert, Zenova, and Thyros , if you can indicate the initial feedback for these products, that would be helpful.
Satish Sharma
Yes.
I think there are lots to unpack in the several questions that you have asked, but I'll give you an executive summary, which is to say that we have had a very encouraging response to the first quarter of our operations.
And this first quarter was more about setting the systems in place, getting the machine to run the way we wanted it to run, get the products out in terms of what you would typically call a seed marketing.
That's what we have done in the first quarter.
And the ramp-up of sales and ramp-up of production is going to go as per plan.
We do not see any surprises or rude shocks in that sense.
From a FY '27, FY '28 kind of a thing that you asked, I think the vision statement states that INR5,000 crores revenue from On-Highway tires by 2030, we're standing on that figure.
I think that should be achieved.
That's what I would like to say on the path of growth of On-Highway.
And we continue to release more and more products.
Many of the brand names, I'm happy you have taken, which tells us that you follow us closely.
Thank you for that.
And we continue to launch the portfolio, continue to build -- it will be a year of building the portfolio, you should say, FY '27.
And FY '28 onwards will be serious business.
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
That is helpful.
You're taking the distributor approach.
So how much would be the market coverage?
And how do you see that expanding?
Satish Sharma
Market coverage is not selective.
It's pan-India.
And we have sliced and diced the country quite intelligently.
And all the distributors have been appointed for all the categories, including for cars.
So now would be the -- adding the number of dealers as per the sales ramp-up.
So we would not be over aggressive in appointing the dealers by the distributors.
It would be as the production ramps up, we will keep on increasing our footprint through the route of dealers.
Balkrishna Industries Limited July 30, 2026
AND MANAGING DIRECTOR · MR. SUSHIL MISHRA – HEAD, ACCOUNTS
Well noted, sir.
Another question from my end to Bajaj, sir.
Sir, employee cost in the quarter has gone up to INR153 crores, 18% increase Y-o-Y.
Would this be because of the minimum wage increase impact in Gujarat?
What has led to this increase?
And how do you see it sustaining going forward?
Sushil Mishra
I think -it is a permutation combination of 2, 3 things.
One is, as you rightly said, the increase in wages in Gujarat -.
And apart from this, we have given the increment also to our staff, and we had increased the staff -to support the new business also.
Rajiv Poddar
As, sir, turnover of the new businesses start kicking in, this will again normalize.
Moderator · Conference Operator
We have our next question from the line of Disha Sheth from Anvil Capital.
Disha Sheth
Sir, I wanted to check since we have Indian business coming to 20% by FY '30 and we have appointed distributors, how are we dealing with dealer margin because we have a lot of established players already who have large market share and large cash on their books.
So are we giving more dealer margin?
What is our strategy there over the next 4 years?
Satish Sharma
Disha, sorry, we do not share our margin figures with the channel.
Disha Sheth
So how are we planning to gain market share with all these established players?
Satish Sharma
Through a great product strategy, which I have in many calls, explained many times.
So I think -- that's a very long-ish answer, so very difficult to explain all over again.
Disha Sheth
Sure.
And sir, this 24% sales momentum led by volume and value, do we plan to sustain it in coming quarters because we have the order book also in our hand normally.
So what is your view on that across our whole company?
Rajiv Poddar
So we don't give forward-looking statements, and we'll refrain from doing the same.
Disha Sheth
Okay.
But sir, based on the order book, will the momentum here according to you if the things remain same...
Rajiv Poddar
Ma'am, we do not give forward-looking statements.
Please I would request you to refrain from continuously asking.
Disha Sheth
Sure, sure, sure.
And sir, in terms of margin since the Indian business is going to be 20% going forward, also over 5, 6 years and then it will also grow Indian business.
So our margin profile, will it tweak a little bit?
Or what is your take on that?
Rajiv Poddar
I'm repeatedly saying please do not ask the forward-looking statements.
We will refrain from it.
We are -- third time I'm telling you, please refrain from that.
We will not make comments.
I'll keep on rejecting the comments.
Moderator · Conference Operator
Ladies and gentlemen, that was the last question of the day, and I now hand the conference over to the management for closing comments.
Balkrishna Industries Limited July 30, 2026
Rajiv Poddar
Thank you, everybody, for taking out the time and joining us.
I look forward to meeting you all in the next quarter.
Thank you.
Moderator · Conference Operator
Thank you.
On behalf of Balkrishna Industries Limited, that concludes this conference.
Thank you for joining us, and you may now disconnect your lines.
Questions and answers
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