JK Tyre & Industries Ltd (JKTYRE) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator (Emkay Global Financial Services Limited): Ladies and gentlemen, good day, and welcome to JK Tyre & Industries Limited Q2 FY '27 Conference Call, hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand over to Mr. Chirag Jain from Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Chirag Jain (Emkay Global Financial Services Limited): Thank you, Anna. Good evening everyone. On behalf of Emkay Global Financial Services, I welcome you all to the 2Q FY '27 earnings conference call of JK Tyre & Industries Limited. Today from the management team, we have with us, Mr. Anshuman Singhania, Managing Director; Mr. Arun K. Bajoria, Director and President International; Mr. Mandar Deo, President India; Mr. A. K. Kinra, Financial Advisor; and Mr. Sanjeev Aggarwal, Chief Financial Officer. I will now hand over the call to the management team for their opening remarks, post which we will open the floor for Q&A. Over to you, sir.
Anshuman Singhania (JK Tyre & Industries Ltd): Yeah, thank you very much. I welcome you all to the JK Tyre Q2 FY '27 earnings conference call. I would like to take this opportunity to wish you and the family a very happy Deepawali and a festive season. I am glad I'm here and with me there is Dr. Arun Bajoria ji,
Anshuman Singhania (JK Tyre & Industries Ltd): International, Dr. Vandana Dehu, President India, Mr. K. K. Kindra, Financial Advisor and Mr. Sanjeev Aggarwal, CFO. Let me start with the macroeconomic prospect. Despite supply chain disruption, high commodity prices and geopolitical uncertainties, Indian economy has outperformed the global economic growth, showing a resilience with real GDP growth of 7.8% in Q1 FY '27 and expected 7% plus growth in Q2 FY '27. This robust growth has been driven by rising domestic consumption, high impetus on infrastructure investment by government and strong macroeconomic fundamentals. Continued strength in the service sector along with steady manufacturing growth is helping to sustain the growth momentum. However, in recent developments around the surge of West Asia conflict remains the critical factor given their implication for India's inflation,
Anshuman Singhania (JK Tyre & Industries Ltd): external balance and corporate profitability.
Anshuman Singhania (JK Tyre & Industries Ltd): Overall, India's economic backdrop remains supportive to grow growth with GDP forecast for the full year FY '27 revised up to 7.1% from the erstwhile projection of 6.7% by RBI. India's automotive industry is continue currently passing through a healthy demand cycle with broad-based growth visible across segments and is good indication indicator of sustained growth momentum across industries. Policy leverage support from government vis-a-vis introduction of GST 2.0, PLI scheme, Automotive Mission Plan 2026, Vehicles Scrap Policy have played a defining role in accelerating the auto sectors auto sector's trans- transformation. Indian auto industry delivered a robust performance in the first half of FY '27, including Q2, as the consumer confidence remained high with CV witnessed a sale growth of 30%, passenger vehicle saw a growth of 26%, 2-3 wheeler 27% on a year-on-year basis. The growth in this quarter has come on the back of GST reform, onset of festive season, resilient rural and urban markets and increased freight movement, which is growing constantly at a CAGR of 5% to 7%. We see that the Indian auto industry has significant long-term growth potential on the back of low vehicle penetration, increasing customer aspiration, rapid traction in premiumization. Coming to JK Tyre, in Q2 FY '27, we have achieved our highest ever turnover of ₹4,850 crores, up by 20% on a year-on-year basis. This performance was broad-based across markets and product segments. India's business has picked up significantly growth momentum post the GST 2.0 with an increase in OE sales of 65%, resulting in 32% growth in the overall domestic sales on a year-on-year basis. This has been delivered through a disciplined execution across markets and segments. The steep increase in price of the key raw material due to West Asia crisis and continued volatility has triggered the inflationary pressures, impacting the profitability margins in the near term. During this quarter, as a result of these headwinds, the average raw material cost has increased by 9% over the previous quarter. In addition, 22% increase since Q1 FY '27. However, these cost pressures are being managed through a combination of improvement in product mix,
Anshuman Singhania (JK Tyre & Industries Ltd): and internal efficiencies. Calibrated price actions and internal efficiencies. TBR PCR segment continued to remain a cornerstone for our product strategy with extremely robust double-digit volume growth of 76% and 35% respectively on a year-on-year basis, thereby reinforcing OEMs' high confidence and strong interest in JK Tyre's technology and brand positioning. Premiumization continues to act as a key enabler of sustained earning growth, particularly within the passenger car category. At JK Tyre, nearly 30% of passenger line volume sold in H1 are towards the premium SKUs, that is 16-inch and above tyres. This segment had maintained a high CAGR of nearly 20% over the past 2-3 years, underscoring the shift in the consumer preferences. India's transition to electric mobility is accelerate is happening on back of strong consumer demand. At JK Tyre, electrification continues to drive a meaningful surge in overall volume sold across the segment. And in line with this, we are proud to share that our EV volume has surged over 24% over the previous quarter. I would like to specially mention our leadership position in the electric truck and bus segment. We are delighted to announce that the recently launched MG Hector Tomahawk has been introduced on our EV-specific tyres, that is on Ranger XPE, reinforcing the strong trust placed in us by the leading OEMs. I would like to reiterate that with our diverse range of products, JK Tyre is committed to deliver excellence through its innovation and advanced mobility solutions. In order to strengthen our customer reach, we have further added numerous brand shops, 250 plus pit shops and several mobility fleet accounts during the quarter. Apart from the above, 80 plus new dealers have been onboarded in Q2, out of which nearly 50% are in rural dealers and distributors. We are proud to announce that JK Tyre has further expanded the OTR range of tyres by introducing premium and application-specific products. The automotive landscape is undergoing a rapid transformation as digital technologies continue to redefine how vehicles and tyres are designed, manufactured and sold. JK Tyre remains remains deeply committed to embedding emerging technologies, including IoT, AI, and ML into how we design and manufacture products, optimize supply chain, and serve consumers across geographies. We continue to remain confident about the opportunities ahead, supported by our dedicated R&D and innovation capabilities, a robust product portfolio, sizable CapEx plans, and unwavering commitment to creating enduring value for all stakeholders. It is with utmost pride we have announced that JK Tyre has been awarded with the momentous Mahatma Award for Community Initiatives 2026 for the fourth time in the row. This receipt of this prestigious award is a strong demonstration of the company's sustained efforts towards community development and social welfare. Now, I would like to take you through some of the key operational highlights for Q2. Domestic market recorded a healthy volume of 22%, driven by robust 25% in the OE market and similar similarly 20% in the replacement market. TBR volume
Anshuman Singhania (JK Tyre & Industries Ltd): truck volume witnessed an overall growth of 14% led by OEM market growth of 35% on a year-on-year basis. Farm category volume saw a significant growth of 16% in the replacement market and 6% in the OEM market. Further export of farm also saw an increase of 11% on a year-on-year basis. Two-three wheeler volume in the replacement market jumped more than 2x, while OEM volume grew by 11%. Overall growth in this segment was 34% on a year-on-year basis. Now, I would like to request Shri Bajoria ji to talk about the performance of JK Tornel.
Arun K. Bajoria (JK Tyre & Industries Ltd): Thank you very much, MD sir. I will begin with a brief overview of the operating environment in Mexico. The Mexican economy has shown signs of stabilization in recent months. While inflation has edged slightly above the Bank of Mexico's target of 3% for the period ending September 2026, the central bank is expected to maintain a hawkish monetary stance to keep inflation expectations anchored going forward. As per the latest report from International Monetary Fund, Mexico's real GDP for 2026 is projected to grow by 1.5%, reflecting a modest and gradual recovery following an extended period of fiscal consolidation and tight monetary policy. The Mexican peso has appreciated against US dollar by nearly 10% in the last 6 months, reflecting confidence in the country's macroeconomic fundamentals. Overall, the outlook of Mexican economy remains positive and continues to be shaped by several global factors, including US trade policies, review of USMCA, growth in domestic manufacturing and services sector. Coming to JK Tornel, the second quarter of FY '27 marked an important phase in the company's recovery journey as it progressively resumed operations with a sharp focus on operational excellence, cost optimization and quality enhancement initiatives. I am pleased to share that our financial performance witnessed a significant improvement during the quarter, with total revenues reaching ₹479 crores and an EBITDA of ₹23 crores, reflecting the positive impact of the measures undertaken by the management. Due to geopolitical disturbances and supply chain constraints, there has been a constant pressure from the increasing raw material prices. However, the company is implementing necessary corrective actions to mitigate this impact. Parallelly, our upgradation-cum-modernization expansion project at JK Tornel is now progressing, which will help in improving the revenue and profitability. Wish you and your families a very happy Deepawali. With that, I would now like to invite Mr. Sanjeev Aggarwal ji to take you through the financial performance of JK Tyre for the second quarter FY '27. Thank you.
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