Apollo Tyres Q3 profit seen up 65% to Rs 162 cr

Apollo Tyres, one of the leading tyre manufacturers in India, is going to declare its third quarter results on Wednesday. Analysts on an average expect pick up in operational performance of the company in December quarter although topline growth will be muted, according to CNBC-TV18 poll.

Consolidated profit after tax is likely to rise by 65 percent year-on-year to Rs 162 crore and revenues are seen going up by 8 percent YoY to Rs 3,490 crore in the third quarter. Meanwhile, earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to increase 19.5 percent YoY to Rs 387 crore. Operating profit margin is seen improving by 130 basis points YoY to 11.3 percent in October-December quarter.
 
According to analysts, good domestic sales will be offset by slowdown in international business. Benign rubber prices will aid profitability in the third quarter, analysts add. Rubber prices hit 2-year low at Rs 161 per kg from peak of Rs 242/kg in April 2011. (Every one percent decline in Rubber prices increases earnings per share by 3 percent for Apollo. Analysts feel revenues will be driven by standalone operations on sustained ramp up at Chennai radial plant. They expect a 4 percent de-growth in sales at Vredestein (Europe) mainly on account of higher base of last year (extended winter). Despite a muted top-line growth, the consolidated margins will improve QoQ on account of lower rubber cost. Investors should watch out for any signs of improvement In South African subsidiary, which posted an EBIT loss of Rs 4.2 crore in September quarter as against profit of Rs 5.3 crore in June quarter. Analysts said international business slowdown was evident in September quarter due to weak economy, increasing Chinese imports and strikes in mines. Infact growth was muted even in Europe (constant currency sales growth was flat), analysts added. Tyre industry volumes in Europe were down 12 percent YoY on significant decline in new vehicle sales. Also Read - Cipla Q3: Analysts expect Q3 profit to grow 38% at Rs 372 cr