Apollo Tyres Q4 PAT seen down 27% at Rs 87.3 cr

Apollo Tyres is expected to disappoint the street by its quarterly numbers. Unprecedented spike in rubber costs and lower contribution from Netherland subsidiary, Vredestein will continue to dent margins sequentially.

Profit after tax for the January-March quarter is seen going down by 27% at Rs 87.3 crore on sequential basis and operating profit margin is seen declining at 9.8% versus 11.5%.

However, revenues are expected to go up by 6.5% at Rs 2,524 crore from Rs 2,368 crore in previous quarter.

What to watch out for:

-To witness only 6.5% QoQ growth in revenues because although standalone biz has grown 6% QoQ, seasonal decline in Netherland based subsidiary, Vredestein (VBBV) caused muted growth. 
-Operating Performance to remain subdued for another quarter due to high rubber prices (at Rs. 220/kg) and lack of pricing action to pass on the cost
-Margins to be lower to 9.8% on account of adverse mix (lower contribution from Vredestein) and 10% higher rubber procurement price.
-Price increase of 5-6% in the last quarter to offset the sequential increase of 10-15% in input cost