India Ratings and Research (Ind-Ra) has upgraded JK Tyre & Industries Limited’s (JKTIL) Long-Term Issuer Rating to ‘IND A/ Stable’.
The rating upgrade and stable outlook reflects, JK Tyre’s strong operating performance in FY21 on the strength of strong demand from replacement, OEM and export markets, higher operating efficiencies, leaner cost structure and focus on better working capital management, which has resulted in higher cash accruals leading to debt reduction by more than Rs.1,000 crore.
The company has also resorted to aggressive marketing by expanding the dealer network and brand shops in the current financial year to cater to high rural and suburb demand.
Ind-Ra expects tyre demand to sustain following a double-digit percentage increase in OEM and replacement demand. Ind-Ra expects that the initiatives taken by Company – OEM thrust, portfolio premiumisation, exports and launch of the ‘smart’ tyre segment - will enhance revenues, profitability and a sustained reduction in net leverage in FY22..