JK Tyre (JKTYRE) Q2 FY27 Profit Plunges 71% Even as Revenue Hits Record High
Strong domestic demand drove JK Tyre's revenue to a record ₹4,841 crore, but surging raw material costs caused profit to collapse by 71% year-on-year.
JK Tyre posted its highest-ever quarterly revenue of ₹4,841 crore in Q2 FY27, up 21% year-on-year. However, net profit plummeted 71% to ₹65 crore as input cost inflation severely compressed margins.
For JK Tyre, the second quarter was a story of demand and distress. The company rode a wave of strong domestic automotive sales to its highest-ever quarterly revenue. Yet, that top-line success was almost entirely consumed by a relentless surge in input costs, leaving profitability a fraction of what it was a year ago.
The numbers lay out the stark contrast. Consolidated revenue grew 20.7% year-on-year to ₹4,840.73 crore. Sequentially, sales jumped 22.7% from a softer Q1. Profit, however, tells the real story. Net profit collapsed 71.3% from the year-ago quarter to just ₹65.07 crore. The net profit margin shrank by 440 basis points to a thin 1.3%.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 4,840.73YoY +21% | 3,946.24 | 4,011.31 |
| Profit (₹ Cr) | 65.07YoY -71% | 44.09 | 226.86 |
| Net Profit Margin | 1.3%YoY -77% | 1.1% | 5.7% |
Why the top line soared
The revenue surge was broad-based. According to Autocar Professional, domestic sales grew 32% year-on-year, anchored by a remarkable 65% jump in sales to original equipment manufacturers (OEMs). Management cited healthy order books across passenger and commercial vehicles following fiscal changes under GST 2.0. The replacement market also grew a solid 20%. The company's Mexican subsidiary, JK Tornel, contributed ₹479 crore in revenue.
The cost wall that profits hit
This demand momentum ran straight into a wall of inflation. Raw material costs, which account for about 70% of tyre manufacturing expenses, soared. The cost of materials consumed surged 39% year-on-year to ₹3,392.71 crore, as reported by Autocar Professional. Management said its raw material price basket rose 9% sequentially in Q2, with a cumulative increase of around 30% over the first half of FY27. Elevated global container freight rates, linked to West Asian geopolitical tensions, added further pressure.
The result was a severe margin squeeze. While the company raised tyre prices by 7% quarter-on-quarter and 11-12% over six months, the hikes lagged the speed of cost inflation. In a price-sensitive market, passing through the entire increase takes time, creating a profitability gap.
The path to recovery
Management's plan to close that gap rests on three pillars: more price increases, manufacturing efficiencies, and a richer product mix. The company plans another 4-5% price hike in Q3 FY27. It is also focusing on higher-value products, like passenger car tyres of 16 inches and above, which carry better margins.
However, the timeline for a return to previous profitability levels remains uncertain. Chief Financial Officer Sanjeev Aggarwal told Autocar Professional it is difficult to predict the extent of margin recovery due to market sensitivity. The company is also undertaking a major ₹4,980 crore capacity expansion, which is expected to increase net debt by ₹500-700 crore in FY27.
Key Points
- JK Tyre achieved record quarterly revenue of ₹4,840.73 crore in Q2 FY27, driven by a 32% surge in domestic sales.
- Net profit fell 71.3% year-on-year to ₹65.07 crore as raw material costs jumped 39%, severely compressing margins.
- The company has raised prices by 11-12% over H1 FY27 and plans a further 4-5% hike in Q3 to combat inflation.
- Management is focusing on premium products and operational efficiencies, but has not provided a specific timeline for margin recovery.
- A large ₹4,980 crore capacity expansion is underway, which will increase debt levels in the near term.
Hexa Perspective
The quarter underscores a classic cyclical squeeze: booming volume meets runaway input costs. For JK Tyre, the next few quarters hinge on its ability to execute price hikes without losing market share, a delicate balance in a competitive industry.
The planned price increases and mix improvement are necessary steps, but recovery will be gradual. Investors are weighing strong underlying demand against near-term margin pain and a rising debt profile for funding growth. The stock's discount to the industry PE reflects this uncertainty.
Also read
Want this applied to your portfolio?
Talk to a HexaWealth advisor, or sync your mutual fund data for insights tailored to your holdings.