Buy Apollo Tyres; target Rs 95: Firstcall Research

Firstcall Research's report on Apollo Tyres

"Apollo Tyres was incorporated in 1972. The company`s main business is, manufacture & sale of automobiles tyres, tubes & flaps. Its product range includes truck & bus bias, light truck bias & radial, passenger car radial, farm bias & radial, reported its financial results for the quarter and year ended 31st March, 2013."

"The company's net profit jumps to Rs.882.34 million against Rs.722.55 million in the corresponding quarter ending of previous year, an increase of 22.11 percent. Revenue for the quarter declines 9.86 percent to Rs.20361.70 million from Rs.22590.02 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.1.75 a share during the quarter, registering at 22.11 percent increase over previous year period. Profit before interest, depreciation and tax is Rs.2708.05 millions as against Rs.2325.51 millions in the corresponding period of the previous year."

Also read:Prefer Exide Industries over Apollo Tyres: UBS

"Outlook and Conclusion: At the current market price of Rs.85.90, the stock P/E ratio is at 12.68 x FY14E and 11.80 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.6.78 and Rs.7.28 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 5 percent and 27 percent over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 5.88 x for FY14E and 5.54 x for FY15E. Price to Book Value of the stock is expected to be at 1.62 x and 1.43 x respectively for FY14E and FY15E. The ASEAN region has gradually become one of Apollo's strongest export markets, out of India, accounting for more than 40 percent of exports revenue. The contribution of this region to the total exports revenue of the company out of India has doubled in the last 3 years time. The company already has a sizable distribution network in the ASEAN market. We recommend 'Buy' in this particular scrip with a target price of Rs 95 for medium to long term investment," says Firstcall Research report.

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