Driving future innovation with smart tires and global expansion
The tires that transport us across continents and along dusty roads are often an afterthought. However, JK Tire and Industries Ltd recognizes the important role these companies play in the transport industry.
JK Tires has carved a niche for itself in the Indian market and has become the undisputed leader in truck and bus radial tires. Their dedication leads to the efficient and safe movement of goods and people across the country’s vast network.
JK Tire’s ambitions extend beyond dominance in a single sector. They offer a comprehensive range of tires to suit a variety of needs. Their innovation shines through the development of “smart tire” technology, a pioneering system that monitors tire pressure and temperature to improve safety and fuel efficiency.
Now, let’s dig deeper into the concept and see if there are any investment opportunities in the market.
Note: If you want to learn candlestick and chart trading from scratch, here are some of the best books available on Amazon! Get the book now!
JK Tire Industry Overview
The global economy has faced ongoing challenges over the past two years due to the aftermath of the pandemic, geopolitical turmoil, soaring raw material prices, and soaring inflation. However, India remains one of the fastest growing economies, with a nominal GDP of USD 3.5 trillion and an estimated growth of around 7% during fiscal 2022-23.
The resilience of the Indian economy has been evident, helped by a rebound in consumption, increased government infrastructure spending and a good monsoon supporting agricultural growth. The automobile industry, a significant contributor to India’s GDP and employment, has recorded robust double-digit revenue growth of around 20 per cent during fiscal 2022-23.
Factors such as new model launches, infrastructure growth, and a rebound in demand have fueled this growth. The industry also continued to focus on green mobility, with electric vehicle sales growing rapidly across categories, driven by improved EV infrastructure and superior performance.
The tire industry, a capital- and material-intensive process industry, suffered from problems with raw material supply and demand and high input costs in the first half of the year. However, as raw material prices stabilized, the industry benefited from economic recovery and economic growth. original equipment manufacturer (OEM).
The aftermarket sector also recorded healthy growth despite a slowdown in exports last quarter. Radiation has reached a level of 60% in the commercial sector. The industry is working extensively with the automotive industry to develop tires for electric vehicles, while also addressing regulatory requirements for expanded producer responsibility for end-of-life tires.
Overall, the outlook for the automobile and tire industry remains positive, driven by government plans and expectations that India will become the third largest market globally by 2030.
JK Tire Company Overview
JK Tire Industries was incorporated as a private limited company on February 14, 1951 under the name of JK Industries Ltd. The company manufactures trucks, buses, passenger vehicles, MCVs (multi-purpose vehicles), LCVs (light commercial vehicles) and tractors.
JK Tires operates in over 105 countries and has a network of over 180 distributors for tire sales. The company produces approximately 35 million tires annually at 12 sustainable manufacturing facilities, nine in India and three in Mexico. JK Tires also has a strong sales network of over 4,000 dealers and over 500 brand stores namely Steel Wheels and Xpress Wheels.
JK Tires is the first company in India to have tubeless passenger radial tires and OE fitments and the first company in India to launch high-performance Z, V and H grade passenger radial tires. Customers include Maruti Suzuki, Eicher, Ashok Leyland, TVS, Mahindra and Tata Motors.
The company is currently trading in the range of 410-430, the company hit its all-time high of 553.95% on February 05, 2024, with increased profit booking pushing the stock price lower despite its good financial performance.
Also read…
JK Tire’s finances
In fiscal year 2023, JK Tire and Industries recorded revenue of $1,464.4 billion, up 22.21% from $1,198.2 billion in fiscal year 2023. Over the three years from fiscal 2021 to fiscal 2023, the company performed well. The compound annual growth rate (CAGR) of sales is 18.85%.
JK Tire in FY 23 also recorded a net profit margin of 264.74crores, up 32.17% compared to 200.3crores in FY 22.
This increase in sales and net profit was driven by the growth of the domestic automobile industry, resulting in increased demand for tires and increased innovations such as smart tires and EV-specific tires.
In FY 23, JK Tire maintained favorable financial metrics with a return on equity (ROE) of 9.56% and return on invested capital (ROCE) of 10.26%.
JK Tire’s future plans
JK Tire and Industries plans to aggressively increase sales across product categories such as trucks, buses, two- and three-wheeler passenger vehicles, and off-road in both replacement and export markets. They sought to achieve this by expanding their distribution reach by establishing more exclusive JK Tire brand stores across India.
JK Tire focuses on strengthening sales electric car A line of (EV)-specific tires with ultra-low rolling resistance for buses and cars in domestic and overseas markets. They wanted to expand their product portfolio offerings to further expand their geographical presence in key markets such as Australia, Europe and South Africa.
JK Tire aims to reduce debt by using improved profitability and cash flow to liquidate its balance sheet. The company also develops technologically advanced, eco-friendly tire products in line with evolving market requirements and demand for sustainable products. They are focusing on higher profit margins and premium tire categories, such as higher inch sizes (>16 inches) for passenger cars.
They also wanted to cover various sustainability initiatives in a 5P framework, covering areas such as resources, productivity, environmental protection, community development and employee well-being. They focus on specific goals such as reducing greenhouse gas emissions, reducing water consumption, increasing the use of renewable energy, and achieving global benchmarks.
conclusion
JK Tires and Industries Ltd is not just a name in the Indian tire industry, it is a symbol of a trustworthy movement. For decades, our dominance in the truck and bus radial tire segment has ensured the smooth flow of goods and people across the country.
JK Tires understands that responsible travel requires a focus beyond the road itself. This is where our commitment to sustainability comes in. JK Tires ensures that we don’t just manufacture tires, we take a holistic approach to securing a greener future.
By embracing technological advancements and being environmentally responsible, we are well positioned to not only maintain our dominance in India but also become a global force shaping the future of the tire industry.
Let us know your thoughts in the comments below.
Written by Pavunkumar VM
By leveraging the Stock Screener, Stock Heatmap, Portfolio Backtesting and Stock Comparison tools on the Trade Brains portal, investors have access to comprehensive tools to identify the best stocks, stay updated and informed with stock market news. invest.
Start your stock market journey now!
Want to learn stock market trading and investing? Check out exclusive stock market courses from FinGrad, a learning initiative from Trade Brains. You can sign up for free courses and webinars from FinGrad and start your trading career today. Sign up now!!
