Apollo Tyres - Q1 FY22 call highlights - YES Securities

Strong margin performance in Europe help partially negate India weakness - Not Rated

- Demand - Domestic market witnessed steady improvements form Jun-21 overall. Truck OEM is a laggard while rest OE and replacement overall seeing good demand. Expect to maintain current export momentum with a target of 15% of SA revenues (v/s 10% now).

- SA revenue decline of 11% QoQ was led by similar decline in volumes. Took price hike of 3-4% in 1QFY22 in replacement segment in India. Have announced further price increase in July to offset RM cost push of ~5% QoQ in expected in 2Q.

- Europe - Improvement in sales mix - UHP / UUHP accounted for ~38% of PCLT sales in volume terms in 1QFY22 (v/s 36% in 4QFY21) and cost rationalization helped margins to sustain at elevated level of 16.3% (v/s S/A margins at 10.4%).

- Consol debt increased to Rs48b in 1QFY22 (v/s Rs42b in FY21). Net debt to EBITDA at 1.6x as of June-21 v/s 1.5x of Mar-21. India Rs39b and net debt 1.8x. Increase in debt is due to inventory increase (as cost has gone up).

- Capex FY22 - Rs18b (unchanged) for SA and Rs2b for Europe while don't expect much capex in FY23.

Shares of Apollo Tyres Ltd was last trading in BSE at Rs. 222.4 as compared to the previous close of Rs. 225.5. The total number of shares traded during the day was 440521 in over 6351 trades.

The stock hit an intraday high of Rs. 231.4 and intraday low of 221.1. The net turnover during the day was Rs. 99173750.

Source : Equity Bulls

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