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Apollo Tyres: Should you buy, sell, or hold?

June 20, 2022

About Apollo Tyres Ltd

Apollo Tyres came into inception in 1972 and has since been a trusted name in the business of manufacture and sale of tyres. With its corporate headquarters in Gurgaon, India, the company caters to many countries across the globe. The company markets its products under its two global brands: Apollo and Vredestein. These products are available in countries across the globe through a vast network of branded, exclusive, and multi-product outlets. Each brand from the company is equipped with its own distinctive visual language and targeted to a specific customer need. This approach has enabled the company to provide a wide range of products for various applications, across geographies, with delighted customers.

The business area of the company

The company is in the business of manufacturing and selling tyres. While the company focuses on its two key brands Apollo and Vredestein it also owns two smaller and region-specific brands Kaizen and Regal. The brands Apollo and Vredestein comprise tyres for passenger, commercial and off-highway vehicles. Brands like Regal and Kaizen focus on the truck-bus tyres segment.

Products of the company

Passenger Car Tyres, Alloy Wheels, Sports Utility Tyres, Van Tyres, Passenger Winter Tyres, Heavy Commercial Tyres, Light Commercial Tyres, Small Commercial Tyres, Agriculture Radial Tyres, Agriculture Cross ply Tyres, Off-The-Road Tyres, Specialty Vehicles Tyres.

PROS

Stock is trading at 0.96 times its book value

Company has been maintaining a healthy dividend payout of 44.77%



Quarterly Results

Revenue for the March 2022 quarter were Rs. 39880.45 million, up 9.88 percent from Rs. 36295.71 million in the same quarter last year. For the quarter ended March 2022, a large loss of -75.85% was reported at Rs. 542.97 million, down from Rs. 2248.25 million. The company's operational profit has dropped from 6164.69 million to 4143.45 million.

What are the options for investors?

ATL stock price has de-grown at 7% CAGR from Rs. 247 levels in June 2017, underperforming the Nifty Auto Index in that time-frame. We can see positive movement in ATL amid retained focus on capital efficiency.

Key price triggers for the future

With demand drivers in place, the topline is expected to rise at an 11.2 percent CAGR from FY22 to FYFE. In a similar timeframe, margins are expected to improve to 13.3 percent, with a consequent RoCE of 10%. transacted at a low cost of capital.


Technical

Apollo Tyres Ltd. is currently trading below 8 out of 8 SMAs and 7 out of 9 Oscillators on a technical level. Both the RSI and the MACD have fallen below their signal and centre lines. This is a very strong bearish indicator, indicating a short-term bearish trend. With a weekly average delivery volume of 21.07 percent, Apollo Tyres Ltd. is trading above its pivot point of 175.82 at 176.45. Positive changes are expected in the near future.


Disclaimer: The conclusions are based solely on chart analysis; no pre-determined geopolitical factors are included. Furthermore, we strongly advise you not to make any decisions based solely on the preceding perspectives. To receive daily intraday recommendations, you must subscribe to our premium service.

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