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EQUITY RESEARCH REPORT ON JK TYRES

Submitted to- Fincrux technologies

By- Abdul shubhan khan

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Acknowledgement

I am very grateful to Fincrux technologies team for their

guidance.
Working on the project is hard, need hard work and
concentration but I made it possible with the support which I
had received from Fincrux technologies team.
I learned a lot from this project and acquired useful
knowledge.
I am thankful to all for giving me guidance, encouragement
and right path to work on it. I thank everybody who has
directly or indirectly helped me in this project to make it
successful.
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Table of content

Topic Pg. no
General overview 4
Shareholding pattern 5
Management and 7
governance

SWOT Analysis 8
Competitive analysis 10
Conclusion and 13
suggestions
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OVERVIEW
The flagship company of JK Organisation, JK Tyre & Industries Ltd is one of
India’s foremost tyre manufacturers and is also amongst the top 25
manufacturers in the world.
For the past four decades, JK Tyre has been at the forefront in driving
innovation and excellence in the tyre industry through introduction of ground-
breaking technologies and products that cater to diverse business segments in
the automobile industry. Pioneers of radial technology, the Company produced
the first radial tyre in 1977 and is currently the market leader in Truck Bus
Radial segment. In 2019, the Company achieved a remarkable feat by entering
the coveted Limca Book of Records with the country’s largest off-the-road tyre
- VEM 045.The Company provides end-to-end solutions across segments of
passenger vehicles, commercial vehicles, farming, Off-the-Road and two &
three-wheelers.
JK Tyre’s unwavering commitment towards innovation is reflected through the
concerted efforts at its state-of-the-art global research and technology centre –
the Raghupati Singhania Centre of Excellence - in Mysore. The Centre houses
some of the world’s finest technologies and techniques, thereby, adding to the
larger efforts of the Company to put India on the global innovation map. The
Hari Shankar Singhania Elastomer and Tyre Research Institute (HASETRI) -
which fulfils need for globally competitive technologies for tyres and polymers
and the JK Tyre Tech Centre, a hub for new product development catering to
current and emerging needs of customers.
JK Tyre launched India’s first ever ‘Smart Tyre’ technology-and introduced
Tyre Pressure Monitoring Systems (TPMS) by offering TREEL Sensors, which
monitors the tyre’s vital statistics, including pressure and temperature.
A global force, JK Tyre is present in 105 countries with over 180 Global
distributors. The Company has 12 globally-benchmarked ‘sustainable’
manufacturing facilities - 9 in India and 3 in Mexico – that collectively produce
around 35 million tyres annually. The Company also has a strong network of
over 4000 dealers and 500+ dedicated Brand shops called as Steel Wheels and
Xpress Wheels. JK Tyre is also synonymous with motorsport in the country. For
over three decades, the Company has relentlessly worked towards shaping
India’s positioning as the motorsport hub of Asia, developing the right
infrastructure for the sport and promoting young talent in the arena.
It is the only Indian tyre manufacturer to be included in the list of Superbrands
India in 2019 for the seventh consecutive year. Additionally, JK Tyre was
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featured among India’s Best Companies to Work For in 2019 by Great Place to
Work®. JK Tyre recently was awarded the most coveted Safety award in the
world -the Sword of Honour for Safety across its plants by the British Safety
Council, UK.

Latest Shareholding pattern and details for JK Tyre & Industries Ltd.

The total Public Shareholding of 107780825 Equity Shares of Rs. 2 each

includes 69185 Equity Shares of Rs. 2 each held in unclaimed suspense account
and 825083 Equity Shares of Rs. 2 each held by Investor Education and
Protection Fund on which voting rights are frozen. (2) Pursuant to the Scheme
of Arrangement between Florence Investech Limited (Florence), BMF
Investments Ltd. (BMF), J.K. Fenner (India) Ltd. (FIL) and Bengal & Assam
Company Ltd. (BACL) which became effective on 24/05/2019 and operative
from the Appointed date, i.e., 1st April, 2017, Florence and BMF stand
amalgamated with BACL and stand dissolved. Accordingly, the shareholdings
in JK Tyre & Industries Ltd. held by Florence- 3,26,59,100 Eq Shares and BMF
- 3,88,64,550 Equity Shares stand transferred to and vested with BACL,
resulting into increase of the holding of BACL in JK Tyre & Industries Ltd. to
13,29,58,250 - 54%. The shareholding of BMF has not yet been credited to the
Demat Account of BACL. BACL is taking necessary steps for credit of the said
shares in its Demat Account.
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Management

Name Designation

Anshuman Singhania Deputy Managing Director

Arun K Bajoria President & Director

Arvind Singh Mewar Director

Bakul Jain Director

Bharat Hari Singhania CEO

Bharat Hari Singhania Managing Director

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Kalpataru Tripathy Director

Meera Shankar Independent Woman Director

Pawan Kumar Rustagi Vice President (Legal) & Co. Secretary

Pawan Kumar Rustagi Secretary

Raghupati Singhania Chairman & Managing Director

Sanjeev Aggarwal Chief Financial Officer

Shreekant Somany Director

Sunanda Singhania Director

Vimal Bhandari Director

Wolfgang Holzbach Director

The respective Board of Directors of the Holding Company and its subsidiaries
and its associates which are companies incorporated in India, are responsible for
establishing and maintaining internal financial controls with reference to
financial statements criteria established by the Company considering the
essential components of internal control stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued by the Institute of
Chartered Accountants of India (ICAI). These responsibilities include the
design, implementation and maintenance of adequate internal financial controls
that were operating effectively for ensuring the orderly and efficient conduct of
its business, including adherence to the respective company’s policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the
accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under the Act.

SWOT ANALYSIS
Strengths
• Strong distribution channel: JK tyres are backed by a very strong network
of distributors with almost 141 outlets just in India. The company is also
known to engage its dealers and has a relationship programme which
ensures high incentives, rewards for superior performance and other
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value-added initiatives. This relationship that it shares with its dealers is

one of its biggest strengths.
• Market Leadership: JK Tyres are the market leader in the radial tyres
market for trucks and heavy vehicles and this is a segment which is
expected to have steep growth prospects in the future.
• Standards and certifications: JK tyres is the first company in Asia to be
awarded an ISO: 50001 certifications. It also has an ISO 9001 and ISO
14001 certification.
• Cavendish: The move to takeover cavendish has helped JK tyres expand
their product since it currently owns 1.2 million units of truck radials. The
move has also helped to improve the production capacity of farm tyres
and off-road tyres.
• Presence in all segments: JK Tyres has the presence in all three price
segments in the India market. The premium segment is sold under the
label JK tyres, the mid-tier under Vikrant Tyres and the value segment is
sold under the label Challenger.
• Exclusive channels: JK Tyres sells their truck tyres through Truck wheels
whereas the Xpress Wheels chain is for the suburban and local markets.
The company uses the chain Steel Wheels for dealing exclusively with
passenger cars and two and three –wheelers. This ensures that customers
get exclusive and specialist services in each category.
Weaknesses
• Cost control: With fluctuation in the prices of synthetic rubber which is
the main raw material for tyres it is becoming increasingly difficult to
control costs of manufacturing.
• Focus on radial tyres: The excessive importance given to the radial tyres
segment for trucks has diluted the focus on other lucrative areas such as
farm tyres and passenger cars. The company needs to look at areas other
than truck tyres.
• Pricing: As competition increases in the tubeless tyres from foreign
players and multinational companies JK tyres will need to focus on
keeping its prices intact since that will be its core differentiator. This will
be a huge challenge for the company.
Opportunities
• High market potential for tyres: The market potential for tyres is expected
to grow at a CAGR of 9.9 % between the years 2017 and 2022. The
prime reasons for this are the new vehicle launches which have grown in
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frequency in both passenger cars and two-wheelers and the growth in

spendable income.
• Growth in two-wheeler market: The number of two-wheeler purchases is
expected to be at an incline in the next decade and the two-wheeler tyres
market is expected to hold the highest market share in the Indian market.
This will be a potential opportunity for JK tyres to look at since it will
mean more frequent replacements as well.
Threats
Competition: The company faces stiff competition from Bridgestone, Michelin,
and Cooper as well as local players in each regional market like PRF and
Apollo Tyres in India.
Dumping from China: Tyre manufacturers in India are facing severe challenges
from the dumping of tyres from countries like China and other regions with
whom India has entered into free trade agreements. This is eating into the
market share of most of the Indian companies primarily because of their pricing
mechanisms. Other threats include GST and demonetization.

Comparison with Competitors

Name Last Price Market Cap. Sales Net Profit Total Assets
(Rs. cr.) Turnover

Balkrishna Ind 1,447.65 27,985.56 4,782.49 944.98 5,889.31

MRF 59,306.55 25,152.76 15,991.14 1,394.98 13,025.37

Apollo Tyres 128.35 7,342.26 11,062.03 508.62 12,018.53

Ceat 947.30 3,831.84 6,581.11 270.76 4,494.98

JK Tyre & Ind 59.15 1,456.46 6,094.84 228.66 5,155.63

TVS Srichakra 1,424.60 1,090.82 2,052.24 84.42 1,080.76

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GRP 709.15 94.55 348.63 3.00 211.81

Somi Conveyor 21.20 24.97 46.28 2.43 84.39

Innovative Tyre 6.60 11.87 171.79 0.99 106.90

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Comparison on NSE

Current Change TODAY

Company Price (%Chg.) Low / High EPS PE

JK Tyre &
Industries Ltd. 59.15 2.25 (3.95%) 57.20 / 60.30 885548 9.29

121.00 /
Apollo Tyres Ltd. 128.35 8.15 (6.78%) 129.50 14.44 8.89

Balkrishna 91.70 1,351.00 /

Industries Ltd. 1,447.65 (6.76%) 1,483.60 29.61 48.88

42.15 918.00 /
Ceat Ltd. 947.30 (4.66%) 954.80 14.15 66.94

JK TYRE VS CEAT

• It seems that JK TYRES and CEAT are slowly converging on their credit
policies resulting in nearly similar account receivable levels.
• On comparing the inventories figures of both the companies, we find that
CEAT maintains it at about 16% of its total assets unlike JK Tyres being at
about 12% approximately.
• We can identify that accounts payable of JK is consistent and CEAT’s
accounts payables is decreased from 20% to 16% during 2013-2016 period. It
indicates that CEAT’s management has been taking action to keep its accounts
payable low.
• Both JK TYRES and CEAT are raising equity by maintaining a stable long
term debt.
• Both the company’s fixed assets has shown an inclining trend over the period.
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CONCLUSION
JK Tyre & Industries Limited (NSE: JKTYRE), which is in the auto
components business, and is based in India, saw a significant share price rise of
over 20% in the past couple of months on the NSEI. As a small cap stock,
hardly covered by any analysts, there is generally more of an opportunity for
mispricing as there is less activity to push the stock closer to fair value.
Investors looking for growth in their portfolio may want to consider the
prospects of a company before buying its shares. Buying a great company with
a robust outlook at a cheap price is always a good investment, so let’s also take
a look at the company’s future expectations. With profit expected to grow by
28% over the next year, the near-term future seems bright for JK Tyre &
Industries. It looks like higher cash flow is on the cards for the stock, which
should feed into a higher share valuation. Since JKTYRE is currently trading
below the industry PE ratio, it may be a great time to increase your holdings in
the stock. With a positive profit outlook on the horizon, it seems like this
growth has not yet been fully factored into the share price. However, there are
also other factors such as capital structure to consider, which could explain the
current price multiple. f you’ve been keeping an eye on JKTYRE for a while,
now might be the time to enter the stock. Its prosperous future profit outlook
isn’t fully reflected in the current share price yet, which means it’s not too late
to buy JKTYRE. But before you make any investment decisions, consider other
factors such as the strength of its balance sheet, in order to make a well-
informed assessment.