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Dolat Capital Report
Apollo Tyres Ltd. exhibited stellar performance in Q3 amid several challenges. Consolidated revenue grew 8% QoQ to Rs 64.23 billion led by 18.8% QoQ growth in Europe offset by flat growth in domestic and 20 % QoQ de-growth in other regions.
Margin improved sequentially for domestic and overseas business. Domestic Ebit margin stood at 7.66 % (up 288 basis points QoQ) while Europe Ebit stands at 7.93% (up 226 bps QoQ).
Domestic business- original equipment manufacturer demand is strong while replacement demand is subdued (volume decline by 8% YoY).
Management expect demand for replacement and export segment volume to remain subdued in near term as channel inventory is slightly higher than normal.
Demand for both truck-bus-radial and passenger car radial is sluggish in Europe. However Apollo Tyres is gaining market share due to shutdown of plants/ban of products of its Russian peer's. Expect Q4 revenue to be better than Q3.
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