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On Monday, Balkrishna Industries Ltd (NSE:BLKI). (BIL:IN) experienced a change in its stock rating as Nomura/Instinet moved its stance from "Buy" to "Neutral." Accompanying this downgrade, the firm also adjusted its price target for the company’s shares to INR2,644.00, a decrease from the previous target of INR3,242.00.
Nomura/Instinet’s analysts provided insight into the reasoning behind the downgrade, pointing to Balkrishna Industries’ expansion into more competitive market segments. This strategic shift is anticipated to affect the company’s valuation multiples, which are expected to range between 12-16 times, a reduction from the earlier estimate of 14-18 times. The analysts have adjusted their target EV-EBITDA multiple to 14.5 times from the earlier 18 times, positioning it at the higher end of the spectrum due to an anticipated upcycle in off-highway tire (OHT) demand.
The revised price target is based on a roll-forward to June 2026 forecasts, leading to a lower target price of INR 2,644, down from INR 3,242. The downgrade to a "Neutral" rating reflects a more conservative outlook on Balkrishna Industries’ stock. Nomura/Instinet suggests a preference for Ceat (CEAT IN), which continues to hold a "Buy" rating from the firm.
The update from Nomura/Instinet comes as Balkrishna Industries navigates a changing landscape in the tire industry, with competition intensifying in the segments it is entering. As the company adapts to these market dynamics, its financial performance and investor sentiment will likely be influenced by its ability to maintain a competitive edge and capitalize on the expected demand growth in the OHT segment.
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