Shares of Apollo Tyres were in focus today after brokerage UBS assigned a 21% upside to the company. The brokerage expects the stock to hit Rs 355 in a year, 20.87% higher to the previous close of Rs 293.70. ┬аEarlier, the Swiss brokerage had assigned a target price of Rs 295.┬а
Apollo Tyres stock opened higher at Rs 295 against the previous close of Rs 293.70 on BSE. Later, the tyre maker hit a 52-week high of Rs 312.35, rising 6.35% on BSE. The stock has gained 15.68% in the last three sessions.
Shares of Apollo Tyres are trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The stock has gained 46.38% in a year and gained 41.31% in 2022. Total 6.99 lakh shares of the firm changed hands amounting to turnover of Rs 21.49 crore. Market cap of the firm rose to Rs 19,669 crore.
UBS said that declining commodity prices will aid Apollo TyresтАЩ gross margin.
The stock looks attractive at 12x FY 24e price-earnings (P/E) ratio as against the peers’ ratio of ┬а17-26x P/E, it said.
On November 16, HDFC Securities assigned a target price of Rs 316 against the earlier Rs 260.
Post Q2 earnings, the brokerage said, тАЬWhile Europe demand outlook is weak, players like Apollo are benefitting from the vacuum left by Russian tyre exports in Europe post the geopolitical crisis, and hence, Apollo’s Europe business continues to see healthy growth in a weak demand macro. With input costs likely to have peaked in Q2 and backed by industry pricing discipline, we expect Apollo’s margin to gradually normalise in the coming quarters. On account of a strong operating performance in Q2, we raise our estimates for FY23-25E by 14-17%.тАЭ
Apollo TyresтАЩ consolidated net profit climbed 11 per cent in Q2 on the back of robust sales in domestic as well as international markets. Net profit in Q2 rose to Rs 194 crore against a net profit of Rs 174 crore in the second quarter of previous fiscal. Revenue from operations climbed 17 per cent to Rs 5,956 crore compared to Rs 5,077 crore in the year-ago period.
