West Asia crisis to impact JK Tyre's Q1 EBITDA mulls next round of price hike

New Delhi, May 26 (PTI) JK Tyre & Industries expects its EBITDA margin to come under pressure in the first quarter of FY27 due to a sharp rise in raw material costs triggered by geopolitical disturbances in West Asia, its Chairman and Managing Director Raghupati Singhania said on Tuesday.
    The tyre maker has already increased prices by 4-5 per cent during the March quarter and is planning another round of hikes of around 6 per cent to offset rising input costs, Singhania said during the company’s post-earnings call.
    "But even then, the EBITDA margin will be impacted in this order because the price rise (in raw materials) is very sharp," Singhania said while replying to a query on the impact of the increasing raw material prices on profit margins.
    JK Tyre is seeking to partially pass on the higher costs through price increases, although margins are expected to remain under pressure in the near term.
    "As far as the West Asian price is concerned, it has affected us on three fronts. Some of our exports in the Middle East have certainly been impacted. Then the shipping channel has been disrupted to an extent, as we know and therefore, the delays in supplies and container pricing have been caused," he said.
    The company is trying to minimise, as far as the raw material price is concerned, by relying more on the Western and Eastern suppliers.
    Singhania said "capital gains will not be really impacted" from this crisis.
    While replying to a query on its Mexican subsidiary JK Tornel, Singhania said it has contributed about 20 per cent to its portfolio.
    In the March quarter, revenue from the Mexico business was down 16 per cent to Rs 377.57 crore. Singhnia said it was impacted as there were uncertainties regarding tariffs.
    "So, now the tariff question is settled," he said, adding that "going forward, we expect that Mexico will continue to, apart from selling its own market, sell three markets".
    JK Tornel serves the domestic Mexican, Latin American and US market.
    JK Organisation has reported an 80 per cent year-on-year jump in consolidated net profit to Rs 177.96 crore for the March quarter, helped by double-digit volume gains in the domestic market. Its revenue from operations rose 12.36 per cent to Rs 4,223.44 crore.
    "The GST reform is still having momentum in terms of demand. Although it has slowed down, the momentum is still there... It has encouraged demand generation. It has encouraged the desire for ownership of cars," he said.

(This story has not been edited by THE WEEK and is auto-generated from PTI)