Balkrishna Industries FY26: Flat revenue, softer margins, and a bigger capex-led bet on on-highway

Balkrishna Industries Limited (BKT) closed FY26 with a stable top line but weaker profitability, as raw material inflation, supply chain disruptions, and foreign exchange volatility weighed on earnings. On a standalone basis, the company reported total income of INR 10,656 crore for FY26, flat year on year. EBITDA fell 10% year on year to INR 2,423 crore, with EBITDA margin declining to 22.7%. Profit after tax declined 25% year on year to INR 1,222 crore.

Q4FY26 showed a similar pattern. Total income rose 2% year on year to INR 2,894 crore, but EBITDA declined 6% year on year to INR 663 crore and PAT declined 19% year on year to INR 295 crore. Management attributed part of the quarterly margin pressure to late-quarter geopolitical disruptions impacting supply chains. It also highlighted that Q4 included a realized foreign exchange loss of INR 47 crore, while FY26 included a realized foreign exchange loss of INR 164 crore.

Operationally, BKT’s core off-highway tyre (OHT) volumes were steady. OHT volumes in FY26 were 317,356 metric tonnes, up 1% year on year, while Q4 volumes were 85,820 metric tonnes, up 5% year on year. Management commentary pointed to a recovery in Europe in the second half as channel inventories eased, improving traction in the Americas, and sustained momentum in India.

Revenue mix: still dominated by OHT, with carbon black as the second pillar

BKT’s FY26 revenue mix remains concentrated in off-highway tyres. The investor presentation states that OHT contributed about 91% of overall revenue, while carbon black contributed about 9%. Within OHT, FY26 geography mix was presented as Europe 40.0%, Americas 36.3%, India 13.2%, and Rest of World 10.5%. The segment mix in FY26 was presented as agriculture 58.8%, OTR 37.5%, and others 3.7%. Channel mix was replacement 70.1%, OEM 28.7%, and others 1.2%.

Carbon black is being positioned not only as an input advantage for tyres, but also as a third-party business supported by energy integration at Bhuj. Management stated that a new carbon black line was commissioned in December 2025, taking capacity to 265,000 MTPA, and that the new lines are already at full utilization, supported by internal consumption and third-party sales. On the call, the company stated that about 30% of carbon black output is consumed internally and around 70% is sold in the market.

Costs, pricing actions, and near-term margin setup

The most direct near-term swing factor is raw material inflation. Management stated that raw material prices increased about 4% to 5% in Q4 and could rise another 7% to 8% in the June quarter. Freight costs were cited at about 4.5% to 5% of revenue, with an expectation of marginal increase if disruptions persist.

In response, the company has taken pricing actions. Management said it has already implemented price hikes of 3% to 5% across various geographies and was targeting another approximately 2% increase toward the end of the month. Even with these actions, it flagged the possibility of margin pressure in the near term, depending on how much inflation can be passed on.

Foreign exchange continues to be an earnings variable. The company reported realized forex losses in both Q4 and FY26. It also stated that the average euro realization in Q4 was around INR 99, and management indicated that FY27 realization should be better, though it did not provide a full-year hedge rate.

Growth roadmap to FY30: bigger capacity, carbon black scale-up, and on-highway entry

BKT reiterated its FY30 ambition of about 2.2x revenue growth, targeting around INR 23,000 crore by FY30 from approximately INR 10,600 crore, implying around 17% five-year CAGR. The company’s targeted FY30 revenue mix is about 70% OHT, about 10% third-party carbon black, and about 20% on-highway.

In OHT, the company aims to reach about 8% global market share. The presentation states that ongoing capex of 35,000 MTPA along with debottlenecking will increase OHT capacity to 425,000 MTPA. It also reiterated that reaching 10% global market share remains a strategic goal to be pursued through modular, phased investments.

In carbon black, the company has already expanded to 265,000 MTPA and increased cogeneration capacity to 64 MW at Bhuj. It targets Phase 2 carbon black capacity of 360,000 MTPA to be onstream in Q1 FY27.

The most strategic adjacency is on-highway tyres in India. BKT launched commercial vehicle radial tyres and re-launched two-wheeler tyres in February 2026. Management stated that product placement in the market started in April 2026 as distribution and channel infrastructure is being built. The company plans to introduce passenger car radial tyres by the end of the current calendar year, following a phased approach, and stated that it aims to price at par with market leaders.

Capacity disclosures on the call provide a sense of scale. Two-wheeler capacity was stated at about 100,000 tyres per month. Phase 1 commercial vehicle radial capacity was stated at 800 tyres per day and is expected to increase to about 3,800 tyres per day. Passenger car radial capacity in the first phase was stated at about 6,700 tyres per day.

Capex and balance sheet: stepping up investments while keeping net debt modest

BKT is in a heavy investment phase. Management stated that FY26 capex spend was approximately INR 2,800 crore. It also outlined an overall capex plan till FY29 of INR 6,800 crore, including an additional INR 2,000 crore approved by the Board. The company clarified that this INR 6,800 crore includes about INR 3,000 crore already spent and that it is project capex only, with maintenance capex of about INR 200 crore per year stated as incremental.

For FY27, management guided capex in the range of INR 1,500 crore to INR 1,800 crore. The additional INR 2,000 crore capex is intended to support capacity expansion and infrastructure across OHT and on-highway categories, AI-enabled automation in on-highway, and sustainability initiatives, and will be staggered over the next few years.

Despite the capex intensity, management highlighted a net debt position that remains contained. As of March 31, 2026, it stated gross debt of INR 4,049 crore and cash and cash equivalents of INR 3,154 crore, resulting in net debt of INR 895 crore.

What to watch from here

FY26 positioned BKT as a company managing near-term cost and forex volatility while continuing to execute a multi-year growth plan. The core OHT franchise remains the dominant revenue driver, but the next leg of the story depends on execution in three areas: scaling on-highway in India without diluting profitability, completing the carbon black expansion to 360,000 MTPA on schedule, and converting capacity additions into volume and mix-led gains.

Management reiterated that it expects blended margins post full commercialization to be in the 23% to 25% range at the company level, but it also acknowledged potential near-term margin pressure due to raw material inflation. For investors, the key signals to track in FY27 will likely be the pace of price pass-through, early revenue contribution from on-highway tyres, and the stability of OHT demand across Europe and the Americas.