Apollo Tyres - Microsec

We have earlier recommended Apollo Tyres Limited a BUY at the level of INR81.75 with a Target Price of INR92 on dated 06 July 2012 which was achieved. The stock has corrected significantly from the recent peak due to increase in rubber prices and announcement of the pricey acquisition of Cooper Tire & Rubber Company, Fall in rubber prices again and sustainable business model of the company gives us conviction to reiterate a BUY again.

With rubber prices expected to remain weak in the near future, we maintain our positive outlook on Apollo Tyres. At the CMP of INR84.50, the stock is trading at 7.12x its FY13E EPS of INR11.84. We assign a multiple of 8x to its FY13E EPS to arrive at a Target price of INR95.

Source : Equity Bulls

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