Apollo Tyres Ltd. share price target

Revenue grew by 12.03% to Rs. 3435.17 Cr in Q3FY17 when compared to the previous quarter. Also, it rose by 16.91% when compared with Q3FY16.

ICICI Securities Ltd | Retail Equity Research Apollo Tyres' (ATL) revenues came in at | 3,458 crore (up 16.9% YoY) above our estimate of | 3,104 crore. In terms of geography, gross revenues from Asia Pacific Middle East & Africa (APMEA) increased by 2% YoY (volumes up 7% YoY while pricing fell 5% YoY) to | 2,493 crore while revenue from Europe & America (EA) subsidiary increased 54.3% YoY to |1,262 crore. Consolidated EBITDA margins came in at 14.4% (down 276 bps YoY;...

ICICI Securities Ltd | Retail Equity Research Apollo Tyres' (ATL) consolidated revenues came in at | 3,085 crore (up 2.4% YoY) vs. our estimate of | 3,348 crore. Revenues from standalone business, largely Asia Pacific Middle East and Africa (APMEA) declined 7.9% YoY (volumes & price down 2% YoY & 6% YoY) to | 2,366 crore while revenue from Europe & America (EA) subsidiary increased 30% YoY to | 994 crore Consolidated EBITDA margins came in at 14.2% (down 193 bps YoY...

Demand from the CV industry accounts for 60% of tyre industry demand and is based on the growth of the economy. With growth slowing and anticipating the shift towards radialisation manufacturers adding capacity of 6 mn TBR (truck and bus radial), utilisation rates could be lower in the next 2-3 years. Also, over the past two years the manufacturers have been in a capex phase, companies tried to add radial capacity due to the sudden shift in demand towards radial tyres and hence the industry managed good pricing discipline. It will be interesting to see if this discipline continues with lower utilisations.

Apollo Tyres’ (ATL) consolidated revenues grew 16.1% YoY to | 3,304 crore (vs. our estimate of | 2,923 crore). Growth was primarily volume driven, up 13% YoY & 8% YoY for Indian & European operations, respectively.Revenues from Asia Pacific Middle East & Africa (APMEA) increased 4.7% YoY to | 2,554 crore while revenue from Europe & America (EA) increased 23.5% YoY to | 1058 crore. Its acquisition of Reifencom clocked revenue of ~| 310 crore in Q1FY17. Consolidated EBITDA margins were at 16.3% (up 34 bps QoQ) vs. our estimate of 15.2% mainly on the back of gross margin expansion of 56 bps QoQ (despite higher NR prices) & lower employee expense .Higher-than-expected revenue & margins improved profitability, with PAT at | 315 crore (up 8.3% YoY) vs. our estimate of | 220 crore. ICICI Securities Limited retain their HOLD rating, valuing the stock at 8x FY18E EPS to arrive at a target of | 180.

competition and cutthroat competition from Chinese imports. Our checks showed that a couple of Chinese players are now offering warranty on tyres this addresses the quality concern.Despiterecentpricecuts,tyrepricesofincumbentsintheTBRsegmentarestill20 25%morethantheirChinesepeers.Wecontinuetobelievethatonlygovernmentactionin terms of antidumping duties can allay extreme competitive pressures, which in our mind...

ICICI Securities Ltd | Retail Equity Research Apollo Tyres' (ATL) standalone business was marginally above our expectations. However, lower-than-expected performance from...

that the industry has taken 1015% price cuts in the TBR (truck bias and radial) segment, mainly initiated by MRF. Bridgestone and Michelin launching lowcost tyres (without warranty)haveonlyaddedtoourworry.Despiterecentpricecuts,tyrepricesofincumbents...

Key highlights: A weak quarter led by both domestic and European market being under pressure.Weforeseestifferpricecompetitionamidaslowpickupindemandandcutthroat competition from Chinese imports. Our checks suggest that the industry has taken yet...