with a market valuation of 15,690.17 Crore, Apollo Tires Limited is a mid-cap company engaged in the tire industry. Apollo Tires is one of the top tire producers in the world. Apollo Tires shares ended trading on NSE today 247.40 per share, down 1.04% from previous close 250. A total of 1,811,459 shares were traded, which is lower than the 20-day average volume of 3,774,125 shares. On NSE, the stock had touched a 52-week high 268.30 on August 19, 2022 and 52-week low 165.25 on 7th March 2022 which means at current market price the stock is trading 7.78% down from the high and 49.71% above the low. ICICI Securities, a brokerage, has set a buy limit of target price of 244-252, 285, and stop loss recommendation 227.00 because it believes the stock has excellent upside potential. The stock has a potential bounce of 15% from its current market price to achieve its target price, which will be a new high for Apollo Tires shares over the stipulated target period of 3 months.
Research analysts at broking firm ICICI Securities said in a note that “the auto and auto ancillary space continued to outperform as the Nifty Auto index continued its strong move after last month’s firm breakout from its multi-year highs since CY17.” Has been seen expanding. Tire stock has remained resilient over the past two months and is witnessing catching activity along with the rest of the auto ancillary space. Apollo Tire is our top choice within tire companies as it recently posted a high CY18 Has generated a firm breakout above the long term supply line ( 307) and CY21 ( 261) with more than double the 50-week average volume indicates a structural turnaround and provides new entry opportunities.”
“The key observation is that the stock has seen a bullish retracement of its 16-month decline ( 261-167) in just two months. A sharp retracement in the quarter time frame indicates strength and a strong price structure. We expect the stock to continue with its current up move and move ahead This is an external retracement of 123.6% of the entire prior decline of the last 16 months as the 285 level in the coming months ( 261-167),” said the research analysts.
“The company posted a healthy operating performance in Q1FY23. Total consolidated operating income was 6.5% QoQ to . Was 5,942 crore. EBITDA for the quarter came in 690 crore with margin up 40 bps QoQ to 11.6%. stood on consolidated PAT 191 crore, up 68% QoQ. Across geographies, APMEA i.e. broadly India’s revenue grew by 10.8% QoQ 4,460 crore while Europe grew by 4.8% QoQ 1,604 crores. Gross margin was flat QoQ while employee cost was down 58 bps QoQ, leading to healthy margins for the quarter. EBITDA margin on a standalone basis was at 9.7% (30 bps QoQ), supported by decline in employee cost and other expenses, which were down 30 bps and 90 bps QoQ respectively, partly due to gross margin decline (~96 bps). QoQ) were offset. , On a standalone basis, the company realized healthy operating leverage gains amid unfavorable RM price movement,” he further added.
“With calibrated capex, lack of existing facilities and focus on capital efficiency RoE, the RoCE in the company has been observed to be 9.7%, 10.8% respectively till FY24. A benign commodity price outlook amid recent cool off in crude oil prices along with operational efficiencies will result in achieving 13.5% EBITDA margin till FY24E. We expect the Company to realize healthy FCF which will eventually be used to substantially reduce debt on B/s during FY 2013-24E. At current market price, it trades at a cheaper valuation of <13x P/E at FY24E EPS and <6x EV/EBITDA on FY24E," said research analysts at ICICI Securities.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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