BIL shares rise 3 per cent to Rs 1,815 as earlying of Bhuj plant

BIL shares went up 3 per cent to Rs 1,815, recovering 8 per cent from the day's low of Rs 1,682 in Monday s intra-day trade on the BSE.

The tyre maker made a regulatory filing on Friday after market hours informed exchange about the commencement of commercial production from its brownfield expansion debottlenecking project at the Bhuj plant. The board of directors approved the aforesaid project at its meeting on February 8, 2021.

The company has successfully completed the commercial production of the brownfield expansion and debottlenecking project at the Bhuj plant. This will result in increased production of tires up to 50,000 MTPA. BIL said that the complete ramp-up in production is expected to be achieved in the next 6 months.

The project was to be commissioned by H 2 FY 23. Such early commissioning comes as a positive surprise. Such a step bodes well for the company as it was already clocking 70,000 -- 75,000 MT per quarter at nearly 100 per cent capacity utilisation, limiting its ability to supply to its end markets, ICICI Securities said in a note.

The brokerage firm expects BIL to report healthy profitable growth going forward. Capex costs for the project were around Rs 800 crore with revenue potential of around 1,450 crore with RoCE in excess of 30 per cent, it said.

Despite today s outperformance, BIL has underperformed the market by falling 19 per cent in the past month due to poor operational performance. The stock has fallen 27 per cent against a 9.5 per cent fall on the S&P BSE SensexBSE Sensex during the October-December quarter of FY22 due to higher rubber, energy and freight costs.