BKT Capacity Expansion and Q2 Dip: Targeting 4.25 Lakh MTPA Amid Profit Pressures
Balkrishna Industries Ltd. (BKT) has unveiled a bold capacity expansion plan while also reporting a sharp drop in quarterly profits. The company aims to scale its off-highway tyre manufacturing capacity to 4.25 lakh MTPA (metric tonnes per annum) under its ongoing capex programme.
In its second quarter of fiscal 2026, BKT posted a net profit of approximately ₹273 crore, down about 21 % year-on-year, on revenues of around ₹2,393 crore (a 1.1 % decline). Operating margins contracted to 21.4 % from 24.0 % a year ago. The company attributed margin pressure to raw-material cost increases and slower demand in key export markets.
Alongside the capacity target, BKT’s investor presentation shows that the new capacity will primarily serve its core off-highway tyre (OHT) segment, agriculture, construction, and mining tyres, and is aligned with its ambition to capture an ~8 % global market share in OHT. With the capacity build-out ongoing, BKT is investing in de-bottlenecking and new lines at its Indian plants (Waluj, Bhuj, etc.).
Despite the profit drop, BKT has declared an interim dividend of ₹4 per equity share, signalling confidence in long-term growth and shareholder returns.
This scenario reflects a dual narrative: near-term profitability challenges amid global cyclical softness, and medium-term growth ambitions backed by capacity expansion.
Editor’s View
BKT’s decision to push ahead with capacity expansion even as profits dip is a clear bet on its long-term positioning in the OHT segment. For the tyre industry, this underlines how scale, global outreach, and exporting remain critical levers of competitiveness. However, the current margin contraction highlights that volume alone is not enough, manufacturers must also control costs, manage input inflation, and diversify end-markets to maintain profitability.
Suppliers, component makers, and logistics partners should watch closely: expansion means increased input volumes (rubber, steel, carbon black) but also higher demand for efficiency and innovation in tyre manufacturing.
