Apollo Tyres Ltd. share price target

Performance at the gross margin level in Q4FY21 surprised us positively. As against our expectation of 360 bps QoQ contraction on account of sharp increase in prices of key inputs over the past few months, the deterioration was limited to 240 bps. ATL undertook a price hike of 4.5% in India replacement segment in H2FY21. Going forward, we believe margins at the blended level would face pressures in the form of ongoing commodity cost escalation and dip in India channel mix (sales to OEMs set to grow faster than sales to aftermarket). However, completion of Dutch plant...

Apollo Tyres (APTY) delivered an operational beat in Q4FY21 led by better margins in European operation.

Apollo Tyres Limited manufactures tires and tubes for cars, trucks, farm equipment, and light commercial vehicles. The company markets its products with two global brands: Apollo and Vredestein in APMEA (Asia...

Q3FY21 margin performance was stupendous, riding on operating leverage benefits, price hikes in India and better product mix across geographies. Spike in prices of key inputs (natural rubber, crude derivatives) are seen impacting gross margins over the short term, thereby leading to an element of normalisation on the overall print. However, supportive factors exist in the form of tighter control over fixed costs along with sharp focus on improvement in European profitability. We build 15%, 16.3% margins on the consolidated basis for FY22E, FY23E, respectively. ATL's consolidated net...

Apollo Tyres (APTY) delivered an operational beat in Q3FY21.

Domestic auto industry volumes have been on a steady mend in the months post lifting of lockdown restrictions. Manufacturing and distribution activities have been getting ramped up gradually since June 2020, in step with the rest of the economy. However, the impact of the pandemic on the supply chain continues to inhibit a complete return to production normalcy. Nevertheless, most automotive industry segments have reported successive improvement in offtake throughout June-November 2020 (Exhibit 1) on the back of (i) initial bounce provided by pent-up aspect,...

Apollo Tyres (APTY) delivered a Q2FY21 beat and has rallied 40% in the last three months due to domestic volume visibility, a better Europe performance and steady margin outlook.

Heavy capex over the past few years (completed doubling of Chennai TBR capacity in 2018, currently in the latter stages of ~| 3,800 crore worth greenfield expansion in Andhra Pradesh) have led to sharp increase in net debt levels from

Apollo tyre(APTY) reported strong all-round performance in Q2FY21 driven by 1) strong revenue traction in replacement market (+18% YoY for TBR and 11% YoY for PCR) benefited from supply issues faced by its competitors and ban on import of Chinese tyres; 2) enhanced product mix (replacement share 74% vs 67%) and 3) RM tailwinds. Company has gained significant market share across segments (500bps for PCR and 350bps for T&B;) and regions. EBITDA grew 61% YoY to Rs 6.95bn with expanded margin at 16.2%...

Apollo Tyres (APTY) surprised positively on both revenue and earnings in Q2FY21, led by strong replacement demand in Indian markets, better Europe operations and above-expected operating efficiency.

Apollo Tyres Limited (ATL) Q1FY21 results were ahead of estimates, mainly driven by better-than-expected revenues. A sharp recovery in replacement demand in both domestic as well as the European businesses helped revenue exceed estimates. Operating margins were better than expectations mainly due to employee furlough benefits to the tune of Euro 7 million (Rs 60 cr). The company reported lower than expected loss. With the government opening up the economy, domestic replacement demand has recovered sharply, reporting a 10% y-o-y growth in June 2020 and a 7-8% y-o-y growth in July 2020. As per management the recovery in replacement demand...

Peak net debt, capex spends behind us; FCF in sight ATL's net debt levels ballooned from | 10,000 crore combined in FY16-20. As a result, the company generated negative FCF in each of the past four years. However, with majority of Andhra Pradesh greenfield capex (| 2,200 crore out of | 3,800 crore as of FY20) now behind us, we expect ATL to utilise future cash flows to lower debt levels and thereby improve net profitability. Our estimates place the company turning...

Apollo Tyres Limited (ATL) manufactures tyres and tubes for cars, trucks, farm equipment, and light commercial vehicles. It is one of the leading tyre manufacturing company with well diversified product portfolio and geographical presence. It has a large distribution network in India and in Europe. The company markets...

Apollo Tyres Ltd(APL) manufactures tyres and tubes for cars, trucks from equipment, and light commercial vehicles. Recent push from the Government on curbing imports and promote domestic manufacturing should be beneficial for the company in the medium to long run. Softer commodity prices (rubber, oil, steel) and appropriate cost control measures will continue to help in margin improvement. We factor 12% earning CAGR over FY20-22E....

Apollo Tyres Limited manufactures tyres and tubes for cars, trucks, farm equipment, and light commercial vehicles. The company markets its products with two global brands: Apollo and Vredestein in APMEA (Asia...

Q4FY20 operating results of Apollo Tyres limited (ATL) were ahead of our as well as street estimates. The company posted better than expected margin performance. Despite a steep fall in the topline, margins improved driven by soft commodity prices and cost control measures. Going ahead, ATL expects replacement demand to pick up faster in both India and Europe once the lockdown norms are relaxed by the Governments. Resumption of business activity and increased usage of personal vehicles post CONVID-19 would drive replacement demand. ATL continues to outpace industry growth in...

While European operations (~30% of consolidated sales) already have a structurally lower margin profile, plant utilisation levels there and in India are expected to come under additional stress (especially in H1FY21E) on the back of slow resumption of manufacturing activities. However, the impact of lower capacity utilisation would be counteracted by improvement of channel mix in favour of aftermarket and cost rationalisation initiatives (ATL is targeting 20% reduction in fixed costs during FY21E). Benign prices of key inputs i.e. rubber and crude oil derivatives are an added tailwind. We build...

Apollo Tyres Limited manufactures tires and tubes for cars, trucks, farm equipment, and light commercial vehicles. The company markets its products with two global brands: Apollo and Vredestein in APMEA (Asia...

Our interaction with ATL suggests the action is primarily aimed at strengthening the balance sheet (FY20E total gross debt at | 6,380 crore; debt to equity at 0.6x). Also, the company is not planning any inorganic acquisition or fresh greenfield capex out of the same. As per the company's internal benchmarking, net debt to EBITDA at ~3x levels was approaching the higher end of the comfort range, which necessitated this step. We believe leverage on books, while significant, was not at alarming levels. However, the step is directionally positive for the company and would...