Buy Apollo Tyres; target Rs 84: India Infoline

ALSO READ See previous views by India Infoline See what other Experts & Brokerages are saying about Apollo Tyres See messages about Apollo Tyres Apollo Tyres BSE | NSE 10/02/12 Are Mutual Funds betting on Apollo Tyres? Other Stocks in this news Bharat Forge | Exide Industries | Motherson Sumi Systems |

India Infoline has initiated buy rating on Bharat Forge, Apollo Tyres, Exide Industries and Motherson Sumi in its research report dated March 17, 2010.

Indian Auto Component manufacturers have registered an improved financial performance in the past couple of quarters on the back of higher volumes arising from the domestic market. Cost cutting initiatives, improved productivity and better financial management during the meltdown (Q3 FY09-Q1 FY10) provided additional traction to their financial performance. We believe the momentum is expected to continue based on the following factors:

• Strong domestic demand for automobiles
• Replacement demand gaining traction
• India emerging as automobile manufacturing hub
• Rising automobile component sourcing from India

Apollo Tyres - BUY

CMP: Rs70, Target: Rs84

• Replacement demand and higher radialization of CV tyres to drive domestic performance
• Foreign subsidiaries to gain from global economic recovery
• Margin scenario is expected to improve
• Initiate with a BUY rating on back of overall growth

Bharat Forge - BUY

CMP: Rs267, Target: Rs295

• Domestic operations on strong revival as CV volumes surge
• International subsidiaries to witness improved performance
• Non-auto business to witness strong growth
• Recommend BUY on strong earnings growth

Exide Industries - BUY

CMP: Rs112, Target: Rs130

• Strong replacement demand to buoy automotive segment performance
• Industrial segment will provide additional momentum
• Lead sourcing strategy to expand margins
• Recommend BUY on strong earnings momentum

Motherson Sumi - BUY

CMP: Rs143, Target: Rs175

• Diversified product portfolio and market presence
• Wiring harness business to gain traction from domestic sales
• Visiocorp acquisition takes MSSL into tier-I league
• Tier-I status to justify premium valuations

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To read the full report click on the attachment