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ICICI Direct Report
Apollo Tyres Ltd. is a leading tyre manufacturer, with operations in India and Europe with an installed capacity of ~7.9 lakh million tonne per annum.
In India, ATL has substantial presence in truck and bus radial tyre (31% market share) and passenger car radial tyre space (21% market share).
Derives ~67% revenues from APMEA (largely India), ~32% from Europe.
FY21 segment mix: Truck/bus ~43%, PV ~35%, OHT ~11%, others ~11%
The company posted a healthy operational Q2 FY22 performance.
Total consolidated operating income was up 10.7% QoQ to Rs 5,077 crore.
Ebitda margins rose 20 bps QoQ to 12.6% amid limited gross margin dip.
Consolidated PAT at Rs 174 crore was up 36% QoQ.
Key triggers for future price performance
Expected India commercial vehicle cyclical rebound, higher radialisation levels, pent up demand in PV and network expansion to be major topline drivers. We expect India-led 16.9% FY21-23E net sales CAGR.
Higher cost competitiveness post Dutch plant specialisation, Europe mix improvement, operating leverage benefits to result in 13.8% FY23E margins.
Ongoing deleveraging focus to accentuate PAT, return ratio momentum.
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