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JKTYRE - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListFundamental Rating: 3.9
JK Tyre shows strong momentum, improving profitability, and reasonable valuation. However, high RSI and modest ROE temper short-term upside.
📊 Financial Overview
- Profitability: PAT dipped slightly from ₹173 Cr to ₹167 Cr QoQ, but YoY growth remains strong at 64.3%.
- Return Metrics: ROCE at 12.1% and ROE at 9.71% are modest, indicating room for operational improvement.
- Valuation: P/E of 24.3 is below industry average (31.3), suggesting fair valuation.
- P/B Ratio: With a book value of ₹162 and price of ₹433, P/B is ~2.67, reasonable for the sector.
- PEG Ratio: 0.82 reflects healthy growth relative to earnings, supporting long-term value.
- Debt Profile: Debt-to-equity ratio of 0.59 is conservative, indicating financial discipline.
- Momentum: RSI at 76.4 and MACD at 16.8 suggest overbought conditions and potential short-term correction.
🏢 Business Model & Competitive Edge
- JK Tyre is a leading player in the Indian tyre industry with strong OEM and replacement market presence.
- Its diversified product portfolio across passenger, commercial, and off-road segments enhances resilience.
- Recent capex and technology upgrades support long-term competitiveness.
💡 Entry Zone Recommendation
- Given high RSI, wait for a pullback toward DMA 50 (₹379) or DMA 200 (₹358) before entry.
- Suggested Entry Zone: ₹370–₹390 for accumulation.
- Long-term holding is viable given improving fundamentals and sector tailwinds.
✅ Positive
- Strong quarterly profit growth and PEG ratio below 1.
- Reasonable valuation compared to industry peers.
- Low debt-to-equity ratio and improving operational metrics.
⚠️ Limitation
- ROE below 10% limits capital efficiency.
- High RSI suggests short-term overbought status.
- Minor decline in FII holdings (-0.02%).
📉 Company Negative News
- Stock has entered overbought territory, raising caution for near-term investors
Business Today
.
- Minor dip in quarterly PAT and FII sentiment.
📈 Company Positive News
- Stock surged nearly 7% post Q2 earnings beat, lifting sector sentiment
Business Today
.
- ROCE trend is improving, indicating better capital deployment
Simply Wall St
.
🏭 Industry
- Tyre sector is benefiting from auto recovery and infrastructure demand.
- Industry P/E at 31.3 supports JK Tyre’s valuation case.
🧾 Conclusion
- JK Tyre is fundamentally sound with improving profitability and fair valuation.
- Entry near ₹370–₹390 is ideal for long-term investors.
- Monitor RSI and ROE trends for sustained upside.
Sources
Business Today
+1
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