JK Tyre & Industries has announced a significant capital expenditure of Rs 4,900 crore aimed at increasing its production capacity by nearly 24% by FY30. This strategic move comes amid expectations of sustained demand in the passenger and commercial vehicle segments, as outlined by Chairman and Managing Director Raghupati Singhania during a recent media call.
The company reported a strong financial performance for the March quarter and FY26, with net profit surging 94% to Rs 199 crore in the three months ended March. Consolidated revenue increased by 12% to Rs 4,233 crore, while EBITDA grew 42% to Rs 546 crore, expanding margins to 12.9%. For the full fiscal year FY26, net profit rose 52% to Rs 786 crore, with consolidated revenue reaching a record Rs 16,384 crore, up 11%. EBITDA also saw a 25% increase to Rs 2,089 crore, with margins at 10.8%.
The expansion plan is set to unfold in three phases through December 2029, with a significant focus on the Chennai facility, where 90% of the investment will be directed to enhance passenger car radial (PCR) capacity. The remaining funds will be allocated to expanding truck-bus radial (TBR) capacity at the Mysore facility.
“We have planned this expansion because we are seeing future demand...we expect demand generation to be quite healthy.”
Raghupati Singhania, Chairman and Managing Director
Currently, JK Tyre is undergoing a Rs 1,130 crore expansion for PCR and TBR capacity, expected to be operational by the December quarter. The company's plants are operating at 95% utilization, and premium tyres, defined as rims of 16 inches and above, now constitute 35% of the product mix, up from 26%, with a target to exceed 50% post-expansion.
Despite these advancements, JK Tyre faces challenges similar to other tyre manufacturers in India. The ongoing West Asia conflict has led to a 15-20% increase in raw material prices this quarter. In response, the company has raised prices by 4-5% in the replacement market and is preparing for an additional 6% increase. "Even then, the EBITDA margin will be impacted this quarter because the rise (in raw material prices) is very sharp," cautioned Singhania.
“Even then, the EBITDA margin will be impacted this quarter because the rise (in raw material prices) is very sharp.”
Raghupati Singhania, Chairman and Managing Director
Background
The tyre industry has been witnessing a steady demand trajectory, driven by the recovery in the automotive sector and increased infrastructure spending. JK Tyre's expansion plans are aligned with these market trends, positioning the company to capitalize on future growth opportunities.
Looking ahead, JK Tyre's focus will be on executing its expansion strategy while navigating raw material cost pressures. Investors and industry stakeholders will be closely monitoring the company's ability to maintain profitability amidst these challenges.
