JKTYRE — earnings call

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Prepared remarks

Moderator · Conference Operator

MR. CHIRAG JAIN – EMKAY GLOBAL FINANCIAL SERVICES LTD. JK Tyre & Industries Limited August 10, 2026

Ladies and gentlemen, good day, and welcome to JK Tyre & Industries Limited Q1FY'27

Thank you.

The first question comes from the line of Vijay Kumar from Axis Capital.

Vijay Kumar

A couple of questions.

First one is on India business.

So can you help us understand what was the volume growth for the quarter 1?

Because when you say 25% growth in volume, so I just want to understand whether you're referring it to broader industry growth or is it like growth for us because our revenue growth was around 14% for India business.

So just want to know about both the volume growth and revenue growth for India business ?

Anshuman Singhania

Our domestic volumes which includes replacement and OEM, grew by 25% on a year-on-year basis from the corresponding quarter.

Vijay Kumar

Yes, sir, then it implies that pricing was down Y-o-Y because revenue growth in India business is 14%, right?

Can you help us with this ?

Sanjeev Aggarwal

Mr. Vijay, in the last quarter there has been an increase in prices and the net effective increase is coming to roughly around 4% on a standalone basis and on sequential basis from the previous quarter, the increase in net sales realization (NSR) is roughly about 5%.

Anshuman Singhania

And just to add, the OEM volumes growth was 42% on YoY basis.

And in terms of price increases with OEMs, it usually happens with a lag so whatever OEM prices have increased, it doesn't reflect fully in the first quarter itself.

It will come in subsequent quarters.

JK Tyre & Industries Limited August 10, 2026

Vijay Kumar

Okay.

And can you also help us about the Mexico business because that has been quite volatile.

Since 4th quarter was also weak and the 1st quarter had also declined significantly on Y-o-Y basis, should we expect it to improve from here?

Or what is the normal level?

What is the expectation for FY'27 regarding the Mexico business?

Arun Bajoria

Mr. Vijay, as I said that during this quarter, the operations at Tornel, Mexico were impacted due to the ongoing geopolitical disruptions resulting in constrained availability of key inputs, which also affected the output.

And then the productivity enhancement negotiations also came in the way this time, particularly this quarter.

But now everything is resolved, and we have again started getting the normal production.

And I can only assure you that this year, in the remaining 3 quarters, we will be definitely showing you better results than in Q1.

Vijay Kumar

Okay.

So, for Mexico business, the input or the supply chain issues was related to ?

Can you provide the details about which part it was or which component it was?

Arun Bajoria

See, mainly, we are getting the raw material from 2 sources.

Because of these shipping disruptions and also the container unavailability, as you would have known by now, the prices have absolutely shot through the roof.

So, these things have affected us, and we have been getting a lot of our bead wire from China.

So that has also affected us.

The story of natural rubber prices is quite similar in Mexico as well, where almost about 18% increase has been seen.

But we are now getting back to the normalcy because certain shipments which were delayed earlier are now reaching one by one.

So, I can only tell you that this was a little softer quarter.

But going forward from here, you will see better production, better sales and therefore a better bottom line.

Vijay Kumar

Okay understood, the concern was China bead wire part, that geopolitical issue between U.S. and China will still continue.

Next Question, how much price increase we have taken in the first quarter in India?

And what is expected for the second quarter?

Anshuman Singhania

In the first quarter, we took price increase of nearly about 5%.

And going forward, we are expecting to take price increases in the range of about 8% to 9%.

Vijay Kumar

So, some of this is already taken out of 8 -9% or all of it will come in the later part ?

Also, 5% hike was in Q1 only, right?

Anshuman Singhania

Yes, and till now, we have already taken about 11% cumulative in replacement market.

Vijay Kumar

Okay sir understood.

Moderator · Conference Operator

The next question comes from the line of Bharat Bhagnani from Living Root Analytics.

Bharat Bhagnani

My question is on the remaining 3 quarters of this year, like as you mentioned that we are expecting better sales, better volumes and better pricing, better profits.

So, could you help us understand and quantify what exactly are we aiming for this financial year?

JK Tyre & Industries Limited August 10, 2026

Sanjeev Aggarwal

So, we are assuming that you are talking about India domestic market because for JK Tornel, we have very clearly explained earlier.

See now the intensity of Middle East war has been lowered and therefore, the supply side problems on account of the raw material, to a large extent, have been resolved.

And we are hoping that these raw material prices stabilize barring some increase of between 8- 10% in our RM cost in next quarter as we have been noticing because of the higher cost inventory which we have accumulated.

But otherwise, things are normalizing.

And once these costs are stabilized, we will be able to see a good margin improvement from at least 2nd half of this financial year.

So, we are expecting all the 3 quarters now onwards should be on a progressive basis, improving in terms of margins.

Bharat Bhagnani

Okay.

Are you concerned at all about the natural rubber prices?

Anshuman Singhania

Natural rubber prices, we have seen some softening happening.

And we see that probably going forward it will move in range-bound manner only.

Bharat Bhagnani

Okay.

Do you feel that once you take a price hike, it should be able to cover that ?

Sanjeev Aggarwal

Yes, we are expecting that the price increases which we have already taken till date plus what we are contemplating going forward should cover the entire increase in raw material prices, except for some minor 1- 2% and we are even trying to offset it through the cost reduction measures, higher operating leverage and the product mix change and higher premiumization.

So, these measures will also improve the margins.

And we should be able to come back to the normal range of 11% to 13% in the second half.

Bharat Bhagnani

Okay.

And what kind of revenue growth are we expecting this year on an overall basis?

Because I think there's some new capacity, which has come as well, right?

Sanjeev Aggarwal

Yes, this was already there and some ramp-up is also happening in PCR.

So, we are expecting that everything will be running by the 3rd quarter of this financial year fully.

We are therefore expecting good double-digit growth on the back of the price increases and the demand led increased volume, everything put together.

Bharat Bhagnani

Double-digit similar to what we did in FY'26, about somewhere of 10% - 11%?

Sanjeev Aggarwal

Yes.

Bharat Bhagnani

Okay.

And what should be the guidance in terms of the operating margins for the whole year FY27, considering the performance in Q1?

Sanjeev Aggarwal

For the whole year, this will be dependent on the raw material prices, of course, but we are trying to maximize it.

It may not be to the extent of what we have seen in the last financial year FY26 because of this first quarter.

But yes, in the range of about 10% to 11%, if I have to make a guess.

Bharat Bhagnani

Got it.

And sir, final question on the balance sheet.

Are we planning to increase any debt this year?

JK Tyre & Industries Limited August 10, 2026

Sanjeev Aggarwal

Yes, there will be some increase in the overall debt because we are implementing expansion projects and the cash available have already been utilized.

So, we are now generating internal accruals to fund these projects apart from the loans we will be taking in a progressive manner.

But please be informed that we are repaying also a large amount of debt every year.

So, it will not be a big jump.

But yes, because of certain operational requirements, the working capital increase that has happened due to higher raw material and selling prices and some capex-led kind of disbursements will also be there.

So broadly, we are expecting an increase of Rs.500- 700 crores overall in this financial year.

But this will provide a lot of increased operating profits i.e. EBITDA going forward in absolute terms.

So, that will help in growing the business.

Moderator · Conference Operator

The next question comes from the line of Krish Jain from NAFA Asset Managers.

Krish Jain

Could you please point out what is the capacity utilization across your TBR, passenger line radial, 2/3-wheelers and in the Mexico business, please?

Anshuman Singhania

Our capacity utilization has been around 95% in the India and on consolidated basis it is around 80%.

Segment wise if I speak, we have been able to utilize nearly full capacities for TBR and 2/3W segments and for PCR it is 95%.

And non-truck bias, which includes LCVs and farm, there is a very sharp utilization towards 95% plus.

Krish Jain

Next question, you had mentioned earlier that some capacities are coming up by 3rd quarter of this financial year.

So I wanted to understand how much is going to be added in each of these categories.

Anshuman Singhania

So, with our expansion plans worth Rs.4,980 crores, which will entail passenger and truck radial, we will be adding about 24%.

Krish Jain

Yes, sir.

But that 24% is over the next 4 years, I was specifically looking for what is being added this financial year and maybe in the next financial year?

Sanjeev Aggarwal

By the next financial year addition will be majorly for the TBR tyres and also for passenger car balancing of various capacities at Banmore tyre plant.

So, this will increase roughly around 7% of the total installed capacities which the company has today.

Krish Jain

Okay.

Sir, final question on the EV tyres.

Generally across the industry, is it true that EV tyres have a smaller replacement cycle?

And if you could explain why?

Anshuman Singhania

Yes, EV tyres are prone to heavy load.

So, the tyre is demanded to have a better rolling resistance.

See in EV cars, the torque is very high so the wear & tear of EV tyre is high and thus it gets worn out faster than normal ICE tyre.

Krish Jain

Okay, as compared to ICE tyre, how much in percentage terms is the life shorter for EV tyres?

Anshuman Singhania

Because of the higher torque around 5% to 10%.

Sanjeev Aggarwal

To add to what Anshuman ji said, that % actually depends how the usage is.

Moderator · Conference Operator

The next question comes from the line of Aditi Shah from Shah Capitals and Broking Limited.

JK Tyre & Industries Limited August 10, 2026

Aditi Shah

I want to understand on 2 fronts.

Despite West Asia war and rising tyre prices, there was still strong demand for tyre industry during Q1FY27.

So, what was Q1FY27 volume growth on a standalone basis?

And second is, what’s our market mix on a standalone basis, basis volumes?

Anshuman Singhania

On standalone basis, growth in domestic volumes was 25% across replacement and OE markets.

And we see going forward that demand is very robust across both rural and urban markets.

Overall, we are seeing a double-digit growth coming in, going forward.

Aditi Shah

Sir, what was the growth on sequential quarter basis?

Anshuman Singhania

Sequential growth was roughly in mid-single digits.

Aditi Shah

Okay.

And our market mix?

Sanjeev Aggarwal

Product wise, the mix at consol level is Truck and bus is 56% and passenger line radial is 27%.

2/3-wheeler is 5% and others including industrial, farm and others put together is 12%.

In the PCR category, mix has been constantly improving, as we have mentioned earlier also.

So, this is better now for 16-inch and above and these high rim sized tyres together make up 35% of total PCR sales volumes.

Moderator · Conference Operator

The next question comes from the line of Vijay Kumar Pandey from Axis Capital.

Vijay Kumar

Sir, I want to understand in terms of the pricing hike, you said we had taken around 5% price hike in quarter 1.

Just want to understand how much of it has flown in the quarter 1?

And when was the price hike taken, particularly in Q1?

Was it in early start of the year or towards the end of the quarter?

Sanjeev Aggarwal

This is actually on a monthly basis as we have been taking smaller staggered hikes every month.

This is not at the beginning or at the end of the quarter rather this is on a monthly basis and we have been taking price hikes balancing with the quantity offtake, which has been easily absorbed as well and we are very cautious about how much price hike we can take every month.

We are basically inching up the prices so that such increase does not pinch the customer as well.

Moderator · Conference Operator

We have the next question from the line of Sohil Marwa, an individual investor.

Sohil Marwa

I just have one quick question.

Do you see rubber prices, natural rubber prices, RSS 4 prices in India trending downwards after the monsoon?

Do you think rubber prices will be closer to INR230 per kg in the case of RSS 4 by the end of the year?

Anshuman Singhania

Yes, we are already seeing rubber prices to soften in India.

We are hopeful that this will fall down by the next quarter.

Sohil Marwa

Okay.

Super.

So, I guess that would result in an increase in margins as well for us going ahead?

Anshuman Singhania

Yes.

Moderator · Conference Operator

We have the next question from the line of Digant Shah from DAM Capital.

JK Tyre & Industries Limited August 10, 2026

Digant Shah

I just wanted some more clarity on your Mexico business which has reported a decline of almost 82%.

And in some of the articles I read there were some strikes in the Mexico plant.

So just wanted to understand that going forward, will the production normalize ?

And can we see the same revenue which we clocked in Q3 or Q4?

Or it will take time to get the production normalized?

Arun Bajoria

Thank you.

First of all, I want to make a small correction that it was not a strike, it was a slowdown.

And secondly, as far as going forward, the same kind of production has already started, and we are now back to normal levels.

But of course, it may take a few more days.

We are hoping that we will be able to turn out more or less similar topline and we are completely at it, and we hope to give you better results.

Digant Shah

And just a follow-up, any update on the USMCA?

What is the update or the status of it?

Arun Bajoria

Yes, the USMCA agreement has been renewed for 10 years.

And therefore, we are hoping that the relations between Mexico and USA in terms of the duty structure is going to be favourable towards Mexico, unlike some of the agreements that USA has made with other countries.

Moderator · Conference Operator

Ladies & gentlemen as there are no further questions, I would now like to hand the conference over to management for closing comments.

Thank you, and over to you.

Sanjeev Aggarwal

Thank you so much everyone for joining us for this Q1FY27 conference call.

And we hope we have answered all your questions to your satisfaction.

And if you have any further questions, you can write it back to us, and we will be happy to answer that.

Moderator · Conference Operator

Thank you.

On behalf of Emkay Global Financial Services Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.