Shares of Apollo Tyres fell around 7 per cent in Wednesday’s trade after scaling 52-week high in the previous session.
The tyre stock slipped 6.80 per cent to hit a low of Rs 277.45 on NSE, erasing 4.3 per cent gains it witnessed in the previous session. On Wednesday, a total of 5.66 lakh Apollo Tyres shares changed hands on BSE. Turnover on the counter stood at Rs 16.20 crore.
The stock, which hit a 52-week high of Rs 303.60 on Tuesday, had fallen in straight four sessions to Monday.
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“Since Q2 FY23 results of Apollo Tyres were average as compared to the previous quarter and YoY, the stock price has expectedly been bearish today. Investors should look to buy only near support levels of Rs 260-265 or if the daily close is above major resistance of Rs 302,” said A R Ramachandran from Tips2trades.
That said, brokerages largely remained positive on the stock on account of “strong margin performance” and “market-share gains in Europe.”
“Driven by better scale and improved net pricing, we expect Ebitda margin to expand, from 12.3 per cent in FY22 to 12.7 per cent in FY23E and to 14.7 per cent in FY25E. We maintain our ‘Buy’ rating, with a revised target price of Rs 345 per share (Rs 325 earlier), applying 13x Dec-24E EPS (Sep-24E earlier),” Emkay Global Financial Services stated in its report.
The brokerage mentioned that strong margin performance, continual market-share gains in Europe and an improving mix of premium tyres pushed the company’s growth.
“In Europe, Apollo Tyres continued to gain market share/brand credibility in the UHP/UUHP PCR (Ultra-High Performance, Passenger Car Radial) and TBR (Truck, Bus and Radial) segments from new geographies and given supply disruption from Russia. Expect FY25E standalone EBITDA margin of 15.2 per cent on operating leverage/price hikes,” Elara Securities said.
The brokerage reiterated a ‘Buy’ call with a target price of Rs 350.
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Motilal Oswal said that “India’s business is seeing signs of a recovery in TBR replacement” and “revenue in FY23 is expected to grow at 20 per cent.”
The brokerage maintained a ‘Buy’ call on the stock for a target of Rs 360.
Apollo Tyres’ net profit rose 11 per cent to Rs 194 crore in the second quarter (Q2) that ended on September 30. The tyre major had reported a net profit of Rs 174 crore in the July-September period of the last fiscal. Revenue from operations was up 17 per cent, at Rs 5,956 crore, as against Rs 5,077 crore in the year-ago period.
Meanwhile, Indian equity benchmarks traded flat in late deals after scaling fresh peaks during intraday trade.
Market capitalisation or m-cap of Apollo Tyres declined to Rs 17,763.77 crore.