JK Tyre & Industries Q2 Revenue Rises 20% to INR 4,850 Crore

JK Tyre & Industries Limited reported its highest-ever quarterly consolidated revenue of INR 4,850 crore in Q2 FY27, up 20% year-on-year from INR 4,026 crore. The performance was supported by stronger domestic sales and operating momentum, although a cumulative 31% rise in raw material prices over six months continued to limit profitability.

What were JK Tyre's Q2 FY27 financial results?

JK Tyre recorded consolidated revenue of INR 4,850 crore for Q2 FY27, compared with INR 4,026 crore a year earlier. The company said growth was broad-based across markets and product segments, with India's domestic business gaining momentum after GST 2.0.

Consolidated EBITDA stood at INR 343 crore, up 28% sequentially from INR 268 crore in Q1 FY27. EBITDA margin improved to 7.1% from 6.8% in the preceding quarter. Cash profit rose 39% quarter-on-quarter to INR 234 crore, while profit after tax increased 40% sequentially to INR 60 crore.

What drove JK Tyre's revenue growth in the quarter?

JK Tyre's domestic sales rose 32% year-on-year, led by a 65% increase in original equipment, or OE, sales. Management attributed the domestic momentum to demand conditions following GST 2.0 and execution across markets and product categories.

In the standalone business, overall growth of about 13% quarter-on-quarter was split broadly equally between volume expansion and higher net selling realisation, according to Chief Financial Officer Sanjeev Aggarwal. Domestic volumes increased 22% year-on-year in Q2, with OE volumes up 25% and replacement-market volumes up 20%. Exports rose 14% sequentially from India, despite geopolitical uncertainty.

Replacement sales accounted for about 60% of standalone revenue, while OE contributed about 30% and exports about 10%. By product category, Truck & Bus represented about 56% of the standalone business, Passenger Line Radial accounted for 28%, two- and three-wheelers for 6%, and non-Truck & Bus products for 10%.

Why are raw material costs pressuring JK Tyre's margins?

Raw material costs are pressuring JK Tyre's margins because the average raw material basket increased 9% quarter-on-quarter in Q2, after a 22% increase in Q1 FY27. Management said the cumulative increase was about 30-31% over six months, driven by West Asia-related inflation and supply constraints.

Managing Director Anshuman Singhania said the company expects a further 4-5% rise in raw material costs in Q3, although it does not foresee availability issues. JK Tyre increased net selling realisation by 7% quarter-on-quarter in Q2, following a 4-5% rise in Q1, taking the increase over six months to 11-12%. A further 4-5% increase in net selling realisation is planned for Q3.

The price response has not fully offset cost inflation. Management said OEM prices are index-linked but adjust with a lag, while passing on costs in the replacement market remains difficult because of competition. High utilisation in radial tyre capacity and internal efficiency measures are expected to support some margin improvement in Q3, but management acknowledged an unabsorbed cost delta.

What is JK Tyre's debt and capital expenditure position?

JK Tyre's net debt increased by INR 751 crore quarter-on-quarter to INR 5,696 crore, while free cash flow was negative in the first half of FY27. The company linked the increase to higher inventory values, higher volumes and expansion-related capital expenditure.

Inventory rose to INR 743 crore as raw material prices increased, volumes grew and the company made some strategic raw material purchases. The company has recently completed projects worth INR 1,400 crore and is undertaking INR 1,130 crore of new Truck & Bus Radial and Passenger Car Radial expansions.

Capital expenditure for the balance of FY27 is estimated at about INR 500 crore, taking the full-year amount to roughly INR 1,200-1,300 crore. Management said working-capital requirements could ease if raw material prices stabilise. It expects the immediate INR 1,130 crore expansion to generate turnover at an approximate 1:1 to 1.1:1 multiple, followed by phased capital expenditure of around INR 5,000 crore in future years.

How is demand shaping up for JK Tyre's key markets?

JK Tyre said demand remains healthy and expects momentum to continue through Q3 and Q4, supported by the festive season, infrastructure spending and year-end OEM production activity. Capacity utilisation in India was above 90% across key segments, including Truck & Bus Radial, Passenger Line Radial and two- and three-wheeler tyres.

Management said the replacement market is showing healthy growth momentum. Over the medium term, it expects high single-digit growth in Truck & Bus Radial tyres and mid-single-digit growth in passenger cars. In the farm segment, management cited some rural-income traction but noted that deficient rainfall in parts of the agricultural belt could affect the season. The company said it is prepared with products and OEM supplies for that market.

Conclusion

JK Tyre's Q2 FY27 results show that volume growth, improved realisations and strong OE demand lifted revenue and operating profit despite substantial input-cost inflation. Record revenue of INR 4,850 crore and higher EBITDA demonstrate the scale of demand recovery, while the 7.1% EBITDA margin reflects continuing pressure from raw material costs.

The next key developments are the expected 4-5% increases in raw material costs and net selling realisation during Q3, along with the execution of ongoing radial tyre capacity expansion. Investors will also track whether raw material prices stabilise, allowing working-capital needs and debt pressure to moderate.