Q3FY21 Result Update - Apollo Tyres - ICICI Direct

Apollo Tyres (ATL) reported a robust operational performance in Q3FY21. Consolidated operating income was at Rs. 5,154 crore, up 17.1% YoY (APMEA i.e. largely India revenues up 22.7% YoY to Rs. 3,449 crore, Europe revenues up 7.5% YoY to Rs. 1,747 crore). EBITDA margins came in at a decade high of 19.2% (up 707 bps YoY, up 297 bps QoQ) tracking 120 bps sequential gross margin expansion, India replacement price hikes across segments (2-3%) and Europe product mix improvement. Consequent consolidated PAT was higher by 155% YoY at Rs. 444 crore.

Valuation & Outlook

We expect sales, EBITDA CAGR at 13.8%, 18.5%, respectively in FY21E-23E with PAT CAGR seeming optically higher due to exceptional charge incurred in FY21E on account of restructuring at its Dutch plant. We are enthused by ATL's revived focus on sweating of existing assets, de-leveraging of B/S and attain healthy capital efficiency. We upgrade the stock from HOLD to BUY, valuing ATL at Rs. 300 i.e. 6x FY23E EV/EBITDA (previous TP Rs. 200).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ApolloTyres_Q3FY21.pdf

Shares of APOLLO TYRES LTD. was last trading in BSE at Rs.241.4 as compared to the previous close of Rs. 243.85. The total number of shares traded during the day was 1175864 in over 10207 trades.

The stock hit an intraday high of Rs. 249.9 and intraday low of 235.15. The net turnover during the day was Rs. 284169788.

Source : Equity Bulls

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