Apollo Tyres - Q1FY21 Result Update - ICICI Securities

Apollo Tyres (ATL) reported a relatively healthy operational performance in Q1FY21 given circumstances. Consolidated net sales were down 33.7% YoY (volume led) at Rs. 2,873 crore (APMEA i.e. largely India revenues down 42.1%, Europe revenues down 12%) EBITDA margins at 8.3% were down 490 bps QoQ. QoQ margin deterioration was largely due to 407 bps fall in gross margins although other expenses were controlled, falling 119 bps QoQ on percentage of sales basis. APMEA EBIT margins dipped 130 bps QoQ to 2% while losses in Europe expanded. Consequent consolidated loss after tax came in at Rs. 135 crore, accelerated by jump in interest costs (up ~101% YoY &~29% QoQ). The company received first tranche of CCPS investment by Emerald Sage amounting to ~Rs. 540 crore, with the second tranche of similar amount set to be received by October 2020.

Valuation & Outlook

We expect sales, PAT CAGR at 4.2%, 8.9%, respectively, in FY20-22E. However, we do not expect return to double digit RoCE trajectory before FY23E courtesy bloated capital employed figures. Hence, we maintain HOLD rating, valuing it at Rs. 120 i.e. 5x EV/EBITDA on FY22E numbers.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ApolloTyres_Q1FY21.pdf

Shares of APOLLO TYRES LTD. was last trading in BSE at Rs.123.45 as compared to the previous close of Rs. 115.6. The total number of shares traded during the day was 2436381 in over 13798 trades.

The stock hit an intraday high of Rs. 124.9 and intraday low of 114.5. The net turnover during the day was Rs. 297977569.

Source : Equity Bulls

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