-
Apollo Tyres, mechanized automobile tyres, tubes and flap for Passenger Vehicles, Commercial Vehicles and Off Higway Tyre, have manufacturing presence through 9 units across India (Kerala, Tamil Nadu, Gujarat), Netherlands, Zimbabwe and South Africa.
-
India’s largest producer and exporter of passenger car tyres, its product portfolio comprises of 6 brands flagship Apollo, Dunlop (brand rights for 32 African countries), Vredestein, Regal and Kaizen for truck-bus tyres and Maloya passenger vehicle tyres. Company had bought South Africa-based Dunlop Tyres International Ltd in 2006 and Dutch tire-maker Vredestein Tires in 2009.
-
In the midst of capacity of 1,590 metric tonnes per day, Apollo commands about 40% market share in the Rs. 30,000 crore Indian tyre market, 70% of which is comprised of the top 5 players – Apollo, Birla, Ceat, JK Tyres and MRF.
-
Stand-in market, which makes up 70% of the India market, mirrors the company’s revenue pie, as it accounted for close to 73% of its annual revenues. It exports to over 118 countries and earns approximately one-third of its revenues from exports.
-
Since of 30th September 2012, promoters hold 43.37% in the company, having pruned their stake from 46.94% as of 30th June 2012. The company enjoys good institutional patronage, with 128 FIIs holding 22.80% stake in the company and 103 DIIs 11.23%. Among its shareholders, it counts marquee names such as Merrill Lynch (1.32%), CLSA (2.9%), ICICI Prudential (5.33%) among others.
-
During FY12, it reported consolidated sales of Rs. 12,153 crore, becoming the first Indian tyre company to cross the annual revenue milestone of over Rs 12,000 crore or US $ 2.5 billion. EBITDA for FY12 was at Rs. 1,299 crore, with EBITDA margin of 10.7%.
-
Apollo Tyers net profit for FY12 was Rs. 410 crore, resulting in an EPS of Rs. 8.13. Accounting for Rs. 327 crore of depreciation and Rs. 82 crore deferred taxes, its cash EPS was Rs. 16.23, on equity of Rs. 50.41 crore (face value Re. 1 each). For FY12, dividend of 50 paise per share was paid.
-
For Q1FY13, financial performance showed expansion in margins on near flat revenues. While consolidated sales were Rs. 3,165 crore, net profit jumped to Rs. 138 crore, leading to an EPS of Rs. 2.74 and cash EPS of Rs.4.59.
-
EBITDA for the first quarter of the year stood at Rs. 361 crore leading to EBITDA margin of 11.4%, up from FY12’s 10.7%. Net margins also expanded to 4.4% in Q1FY13 from 3.4% in FY12.
-
Apollo Tyers net worth, as on 30th June 2012, stood at Rs. 2,968 crore, leading to BVPS of Rs. 59. It has debt of about Rs. 2,550 crore.
-
The share price has corrected lately on fear of steep penalty from the Competition Commission of India (CCI) for alleged cartelization in the tyres industry. We believe that current price has corrected more than warranted, as the fine will not be as harsh as those imposed by CCI on DLF and cement companies previously.
-
The Party also plans to raise Rs. 800 crore via a qualified institutional placement (QIP) in November, for which the board approval is in place. To facilitate the same, FII investment limit in the company has also been hiked from 30% to 40%.
-
As well, news reports suggest that the company may acquire US $ 1.2 billion market cap and world’s 10th largest American tyre firm Cooper Tire & Rubber Company for about US $600-800 million (Rs. 3,200-4,200 crore), to tap the latter’s strong foothold in the global replacement tyre market.
-
Intended for FY13, Apollo (without effecting the potential acquisition) is expected to have an EPS and cash EPS of close to Rs. 12 and Rs. 22, respectively. This implies discounting the share price, based on yesterday’s closing price of Rs. 88, by PE multiple of 7.3 times on current earnings, and by just 4 times, based on expected current year cash earnings.
-
Better replacement demand, expanding margins, recent correction in stock price due to CCI penalty fears have made valuation attractive.
-
Our stock tip to bet the Share for grab at 85 for target 105 for 6 Months Time Frame. ONE YEAR TARGET 125.
