JK Tyre & Industries Limited (JKTI) is a leading tyre manufacturer in India, recognized as the flagship company of the JK Group. The company offers a wide variety of products that cater to trucks, buses, light commercial vehicles (LCVs), passenger cars, multi-utility vehicles (MUVs), two-wheelers, and tractors. Some of its major partners include leading automobile manufacturers like Maruti Suzuki, Tata Motors, Hyundai India, Mahindra & Mahindra, TVS Motors, Bajaj Auto, and Hero MotoCorp.
The company has developed a strong presence in the truck and bus radial tyre segment, making it a major manufacturer in this market. JK Tyre has also expanded its focus towards passenger car tyres, ensuring a balanced portfolio. Globally, the company operates across 100 countries and maintains more than 230 distributors worldwide.
JK Tyre has 12 manufacturing plants, including 9 in India and 3 in Mexico, with a combined annual production capacity of approximately 3.4 crore tyres. These facilities produce a wide range of tyres for trucks, cars, two-wheelers, and more, ensuring efficient delivery to domestic and global markets. The company’s extensive dealer network includes over 6,000 dealers and 750 exclusive brand shops such as Truck Wheels, Steel Wheels, and Xpress Wheels.
With the increasing shift towards electric vehicles (EVs), JK Tyre is investing in innovative products. It has developed smart radial tyres for electric trucks, buses, LCVs, and passenger vehicles. In 2015, the company launched JK Tyre Mobility Solutions, an industry-first program offering fleet operators pay-per-kilometer services, along with tyre maintenance and eco-friendly disposal solutions. Additionally, JK Tyre operates over 200 highway service centers, known as Pitstops, to provide timely tyre services on highways.
Global Expansion and Acquisitions
In 2008, JK Tyre acquired JK Tornel, a leading tyre company in Mexico, expanding its footprint in the North American market. JK Tornel focuses on passenger car radials and caters to clients like Nissan and Honda. The acquisition allowed JK Tyre to strengthen its offerings in farm equipment tyres, supplying brands such as John Deere and Case New Holland in the USA.
The acquisition of Cavendish Industries in 2016 further boosted the company’s production capacities, adding significant volumes in truck radials and tyres for two- and three-wheelers. These strategic expansions have been essential in supporting JK Tyre’s growth and meeting increasing market demand.
Financial Performance and Revenue Mix
Revenue Overview
In FY24, JK Tyre reported net sales of ₹15,002 crore, marking a 2.4% year-on-year (YoY) growth. The revenue mix was divided among replacement sales (61%), original equipment manufacturers (OEMs) (23%), and exports (16%).
- Truck and Bus Tyres accounted for 54% of the total revenue.
- Passenger Car Radial (PCR) Tyres contributed 29%.
- Two- and Three-Wheeler Tyres made up 4%.
- Other Tyres (like agricultural tyres) added 13%.
Growth in the domestic market was driven by replacement demand and increased OEM orders, though export volumes remained flat due to geopolitical issues and supply chain disruptions. Key contributors to revenue included Cavendish Industries (₹3,665 crore) and JK Tornel Mexico (₹2,628 crore).
Profitability Metrics
JK Tyre achieved significant improvement in profitability, supported by efficient operations, cost management, and premium product launches.
- EBITDA in FY24 was ₹2,078 crore, registering a YoY increase of 60%. The EBITDA margin improved to 13.9%, driven by lower raw material costs and product premiumization.
- The PAT (Profit After Tax) rose by 35.7% CAGR over the past five years to ₹811 crore in FY24, reflecting higher operating profits and efficient cost control.
The company increased the share of premium tyres from 12% in FY19 to 25% in FY24. It expects premium tyres to account for 30%-35% of its portfolio over the next two years. JK Tyre also undertook price hikes in Q4 FY24 to further support profitability.
Growth Strategies and Market Outlook
JK Tyre is focusing on expanding capacity to support growing demand for passenger car and truck tyres. With government investments in infrastructure and rising auto sales, the company anticipates revenue growth of 9%-10% in FY25.
- Infrastructure Projects: Increased public infrastructure spending will boost demand for commercial vehicle tyres.
- Electric Vehicles (EVs): JK Tyre has launched new products for the EV segment, covering both passenger and commercial vehicles. It also expanded its OHT (off-highway tyres) range to cater to industrial and mining applications.
- Fleet Management: The mobility program introduced by the company has expanded its fleet offerings, attracting large operators and improving customer retention.
In September 2024, JK Tyre announced the merger of Cavendish Industries, aiming to enhance operational efficiency. As part of the deal, shareholders of Cavendish will receive 92 shares of JK Tyre for every 100 shares they hold, reducing the promoter’s stake to 49.31% and increasing public shareholding to 50.69%.
Operational Efficiency and Cash Flow
JK Tyre has focused on maintaining high operational efficiency through optimized asset utilization and cost control.
- The company reported a cash flow from operations of ₹1,614 crore in FY24, driven by improved working capital management.
- Capital expenditure (Capex) stood at ₹1,400 crore, primarily allocated towards capacity expansion in truck and bus radial (TBR) and passenger car radial (PCR) tyre segments.
- The free cash flow per share in FY24 was ₹10.05, with a strong focus on capital investments to enhance production.
JK Tyre’s asset turnover ratio (ATR) for FY24 stood at 1.14x, and it aims to maintain this ratio through continued capex investments.
Debt and Solvency
JK Tyre has managed its debt effectively, with long-term borrowings at ₹2,187 crore and short-term borrowings at ₹2,287 crore as of March 2024. The company plans to reduce debt through internal accruals and strategic financing.
The current ratio stood at 1.15x, indicating sufficient resources to meet short-term liabilities. The company’s interest coverage ratio remains robust, supported by improved profits, which will help reduce finance costs over time.
Valuation and Shareholder Return
- PE Ratio: JK Tyre is currently trading at a trailing twelve-month PE multiple of 12.97x.
- Dividend Yield: The company paid a total dividend of ₹4.5 per share in FY24, reflecting a dividend payout ratio of 15%.
After reaching an all-time high of ₹554 in February 2024, the stock has seen some correction, with the ₹340-₹360 range acting as a support level. Investors view this range as an accumulation zone, indicating potential upside in the future.
Sector Trends and Competitive Landscape
The Indian tyre industry is shifting towards greener materials and sustainable production. Tyre companies are investing in non-carbon technologies to meet global environmental standards. JK Tyre has been proactive in this transition, introducing eco-friendly tyres made from sustainable materials, such as natural rubber and bio-based oils.
Despite challenges in global markets, JK Tyre has maintained its position among the top five tyre manufacturers in India. It leads the truck and bus radial segment and has built strong partnerships with OEMs. The company’s distribution network covers over 6,500 dealers, and it holds a leading position in the electric bus tyre market, serving clients like Tata Motors, JBM, and Olectra.
Future Outlook and Strategic Initiatives
The future of JK Tyre looks promising, supported by favorable market dynamics and strategic initiatives:
- Capacity Expansion: Ongoing investments will increase production from 3.4 crore to 3.5 crore tyres annually by 2025.
- IFC Investment: The International Finance Corporation (IFC) invested $30 million (~₹240 crore) in JK Tyre, supporting energy-efficient manufacturing and capacity expansion.
- Product Innovation: New product launches, especially for the EV segment, will strengthen JK Tyre’s position in a rapidly evolving market.
- Mergers and Acquisitions: The integration of Cavendish Industries is expected to enhance operational efficiency and unlock synergies across segments.
Conclusion
JK Tyre & Industries Limited has positioned itself as a key player in the Indian and global tyre markets. With a diversified product portfolio, strategic acquisitions, and focus on sustainable growth, the company has achieved consistent financial performance. Its efforts to innovate and expand into new segments, such as EV tyres and premium offerings, will drive future growth.
Despite challenges like geopolitical disruptions and fluctuating raw material prices, JK Tyre’s proactive management strategies have ensured profitability. The company’s strong partnerships, effective cash flow management, and focus on premiumization will help it sustain growth in a competitive market. With a positive outlook for FY25, JK Tyre is well-prepared to capitalize on emerging opportunities and maintain its leadership in the tyre industry.
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