Apollo Tyres Q2 net profit seen up 32% to Rs 70 cr

Apollo Tyres, one of the largest tyre manufacturers in India, is expected to report a consolidated profit after tax of Rs 70 crore in the second quarter of FY12, a growth of 32% as compared to Rs 53 crore in the corresponding quarter of last fiscal.

Revenues are seen going up 28% to Rs 2,500 crore from Rs 1,948 crore during the same period.

Operating profit margin is likely to be at 9% in the July-September quarter of FY12 versus 9.4% in a year ago period.

On quarter-on-quarter basis, revenues are seen going down 11.5% and PAT is expected to fall 9.6%.

What to watch for:

-YoY revenues growth will look good due to labour strike at Perambra facility last year affecting earnings
-However, domestic demand continues to be very slow with replacement demand in truck segment very sedate
-Despite price hikes taken, significant increase in rubber prices to impact YoY margins
-However, On a QoQ basis, rubber prices to give some relief as they fell from peak of 243 Rs/kg in April 2011 to 202 Rs/kg in October 2011
-Last quarter onwards, biz deteriorated more due to removal of anti-dumping duty on Chinese imports (prices lower by 10-15%), will continue to see overhang of that.
-European biz to do well since winter season sales will drive growth, Apollo brand introduced in 4 key markets of Germany, France, UK and Netherland.