Result Update: Apollo Tyres - ACCUMULATE - TP Rs.300 - Kotak

APTY reported strong growth in revenues supported by robust volume growth across segments. EBITDA margins in the quarter also witnessed improvement from higher gross margin and operating leverage benefit. 4QFY18 results came in line with our estimates.

Key Highlights

Consolidated revenue grew by 21% YoY on the back of strong 17% and 13% volume growth in India and Europe operations respectively. EBITDA for the quarter stood at Rs5.15bn, 39% growth YoY. EBITDA growth was driven by 21% revenue increase, 150bps expansion in gross margin and operating leverage gain. PBT grew by 29% YoY; however PAT growth was lower at 9.6% YoY due to lower tax rate in 4QYF17. Reported PAT of Rs2,501mn was in line with our estimate of Rs2,525mn.

Valuation and Outlook

We expect strong volume growth for APTY in FY19/FY20 at both India and Europe. In India, demand across segments is expected to be strong in OEM and replacement demand. Europe, production at Hungary plant will provide impetus to growth. Input cost increase is expected to marginally put pressure on margins in the near term. On the back of improved demand outlook, we increase our FY19/FY20 estimates. We rate the stock as ACCUMULATE (earlier BUY) with revised price target of Rs300 (earlier Rs282).

Shares of APOLLO TYRES LTD. was last trading in BSE at Rs.293.3 as compared to the previous close of Rs. 287.6. The total number of shares traded during the day was 161148 in over 1465 trades.

The stock hit an intraday high of Rs. 294.75 and intraday low of 285.1. The net turnover during the day was Rs. 47009357.

Source : Equity Bulls

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