Share value of Apollo Tyres has tanked 23 per cent thus far in 2022. However, analysts stay bullish and see as much as 73% upside going ahead. According to analysts, Apollo Tyres is all geared for the subsequent leg of progress, with adequate capability to cater to demand from India and Europe. Though the near-term margin is anticipated to stay muted, analysts anticipate gradual margin restoration to sustainable ranges from the second half of FY23 owing to the corporate’s capability to take gradual value hikes. Compared to its friends, Apollo Tyres provides the most effective mix of earnings progress and low cost valuations, mentioned home brokerage agency Motilal Oswal Financial Services in its report. Apollo Tyres shares had been quoting at Rs 168, down 4% on NSE intraday.
Should you purchase Apollo Tyres shares?
Motilal Oswal: Buy
Target value: Rs 265; Upside: 51%
Analysts at Motilal Oswal consider that Apollo Tyres is all geared for the subsequent leg of progress, with adequate capability to cater to demand from India and Europe. “With capex for Phase II of the AP plant concluding in FY23, increase in capacity utilization will generate higher cash flows and further deleverage its balance sheet. The stock trades at 13.6x/8.7x FY23E/FY24E consolidated EPS. We value the stock at 12x Jun’24E EPS (v/s a five/10 year average P/E multiple of ~16x/12x),” they mentioned. The brokerage maintains a purchase name on the inventory with a goal value of Rs 265 per share, implying 51% upside.
JM Financial: Buy
Target value: Rs 300; Upside: 70%
According to the brokerage agency’s report, Apollo Tyres’ volumes in 1Q are more likely to see modest QoQ enchancment. “While replacement segment demand is holding steady, improvement in demand from OEM segment is expected to drive the sequential growth. Headwind from commodity inflation is expected to continue and likely be offset by a) multiple rounds of price hikes taken (APTY has taken 3-4% increase in 1Q) and b) cost saving initiatives,” it mentioned. Though the near-term margin is anticipated to stay muted, analysts at JM Financial Services anticipate gradual margin restoration to sustainable ranges from 2HFY23. The brokerage maintained a ‘buy’ name on the inventory with a goal value of Rs 300. Weakness in home auto gross sales, additional improve in RM price and easing of tyre import restriction are the important thing dangers to the upside.
ICICI Securities: Buy
Target value: Rs 305, Upside: 73%
According to ICICI Securities’ analysts, Apollo Tyres is witnessing demand pick-up in tipper, ICV segments, thus pushing T&B tyre demand up. “On ~1,000TPD TBR capacity, present capacity utilisation of ~75% is giving APTY visibility of absorbing growth in FY23-FY24E without investing for incremental capacity in TBR,” they mentioned. The brokerage maintains ‘buy’ ranking on the inventory with an unchanged DCF-based goal value of Rs 305, implying 13x FY24E earnings. Major discount in RMB price, improved pricing in TBR alternative, and better-than-expected income progress in EU amidst ~17-18% EBITDA margin are the important thing upside dangers to the goal.
(The inventory suggestions on this story are by the respective analysis analysts and brokerage corporations. FinancialSpecific.com doesn’t bear any duty for his or her funding recommendation. Capital markets investments are topic to guidelines and rules. Please seek the advice of your funding advisor earlier than investing.)
Source: www.financialexpress.com”