Apollo Tyres Achieves Impressive Q2 Profits Amidst Rising Revenue and Demand

In a significant financial stride, Apollo Tyres reported a consolidated net profit of ₹474 crore for the quarter ending September 2023, marking an impressive 164% surge compared to the ₹179 crore posted in the same period last year. The robust financial performance was underpinned by heightened revenue and reduced raw material costs, as stated in the company’s regulatory filing.

Revenue and Operational Highlights:

Apollo Tyres reported consolidated revenue from operations totaling ₹6,280 crore, reflecting a noteworthy 5% increase from the previous year’s ₹5,956 crore. Sequentially, the revenue registered a marginal uptick of 0.5% from ₹6,245 crore in the preceding quarter, reaffirming the company’s consistent growth trajectory.

Segment-wise, the APMEA (Asia Pacific, Middle East, and Africa) market emerged as the highest revenue contributor, generating ₹4,473 crore, followed closely by ₹1,819 crore from the European market.

Expense Management and Profit Margin:

The company demonstrated adept expense management, with total expenses amounting to ₹5,613 crore, marginally lower than the previous year’s ₹5,691 crore and ₹5,725 crore. This efficient cost control strategy significantly contributed to bolstering Apollo Tyres’ profit margins.

Market Insights and Future Outlook:

Analysts are optimistic about the automotive industry’s revenue surge in the upcoming quarter, buoyed by a flurry of festivals and the commencement of the agricultural season. This uptick in demand is expected to translate into increased need for tire replacements, positioning Apollo Tyres favorably to capitalize on the burgeoning market requirements.

Industry Comparison:

In a comparative analysis, Apollo Tyres’ competitor, MRF Tyres, also demonstrated robust financial performance, recording a remarkable five-fold increase in net profit to ₹572 crore for Q2FY24. These results highlight the overall industry buoyancy and competitive vigor in the tire manufacturing sector.

Apollo Tyres Stock Analysis: Analysts Maintain Ratings Amidst Steady Performance

Analysts at Morgan Stanley, a renowned global brokerage firm, have upheld their ‘equal-weight’ rating on Apollo Tyres stock, setting a target price of ₹398 per share. Despite this assessment suggesting a 2.6% downside potential from the current market levels, the consensus among 27 analysts leans towards a ‘hold’ recommendation for the stock.

Data sourced from Trendlyne reveals a promising average target price of ₹419 for Apollo Tyres, indicating a potential 3% upside from the present market prices. Despite the moderate downside risk as per Morgan Stanley’s evaluation, the overall market sentiment appears optimistic regarding the company’s future performance.

Analyzing the stock’s technical aspects, the relative strength index (RSI 14) stands at 52.4, indicating a balanced market sentiment. The RSI value suggests that the stock is neither overbought nor oversold, portraying a stable equilibrium in the market dynamics. Furthermore, Apollo Tyres exhibits minimal volatility, evidenced by its one-year beta of 0.8, signifying a low-risk investment.

Apollo Tyres’ stock performance remains encouraging as it continues to trade above key moving averages, including the 5-day, 20-day, 50-day, 100-day, 150-day, and 200-day simple moving averages (SMAs). This consistent upward trend underscores the market’s confidence in the company’s stability and growth potential.