By Reema Tendulkar, Research Analyst at CNBC-TV18
India's largest tyre maker Apollo Tyres is set to announce its results for the quarter ended June 2012 today. Analysts on an average expect the consolidated profit after tax to grow by 75% year-on-on-year to Rs 135 crore, but the same is likely to go down by 14% quarter-on-quarter.
Revenues are seen going up by 18.3% YoY and 3.3% QoQ to Rs 3,340 crore and earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to go up by 54% YoY and 3% QoQ to Rs 370 crore during the same quarter.
Operating profit margin is likely to rise by 260 basis points YoY to 11.1% in the first quarter of FY13, but quarter-on-quarter the same is expected to be flat.
Analysts expect strong earnings due to easing rubber prices, early signs of pickup in domestic demand and steady pricing in the quarter.
Increase in sales will be driven mainly by standalone operations on sustained ramp up at Chennai radial plant.
EBITDA growth will be driven by standalone as well as improved subsidiary performances (mainly South Africa).
Apollo Tyres had also taken a 1.5% price hike in CV replacement in May.
Rubber price trends
International rubber prices went down 25% in last 4 months at 240 yen per kg.
Domestic rubber prices fell by 23% from peak, which currently quoting at Rs 185 per kg as against Rs 190/kg in Q4 and Rs 200/kg in Q3.
Overseas business improving
Vredestein business, which acquired in 2009, has been performing well. Debt is seen falling to euro 50 million from euro 110 million since acquisition.
Business is near full capacity utilisation and volume growth is being driven by exports from India - mainly under the Apollo brand.
In South Africa, the company's target is to return to break-even.