Apollo Tyres has target of Rs 109: Aashish Tater

Apollo Tyres has target of Rs 109, says Aashish Tater, Head of Research at Fortunewizard.com.

Tater told CNBC-TV18, "Apollo Tyres is like what was asbesto sheets during the January-March segment and from there the stock quadrupled and the same model is now suggesting buy on tyre companies. We recommended JK Tyre, Ceat at Rs 80-90 levels and they have already given you 50 percent return. At that point of time we were also bullish on Apollo Tyres and it is the renewed interest that the model is stating where we feel target of Rs 109 is quite achievable in the short span of time."
He further added, "There are couples of reasons that we were able to chalk out that why this could be a good bet at current levels. The market will be in a range bound with hits and misses and guesses whether the Nifty is going up or down. So range bound trades would be very interesting to play with rather than venturing out for some new stories and that is why we picked a sector like tyre."
"Original equipment slowdown will not impact tyre industry because then the replacement business will do well. So from that angle this is a plus point. What was interesting us was the Competition Commission of India (CCI) ruling, which we have been talking about that it will not be negative for tyre companies for quite some time and with the ruling coming in there was not substantial movement even on the price front. This is because the weak hands are willing to exit at current levels."
"Take a call from the result expectations front. Market is chalking out Rs 140-150 range of profit on consolidated front for this particular company and I think there is a slight miss because we are working with a number of close to Rs 178 to Rs 182 odd crore and topline of almost Rs 3,300 crore plus. So on that basis if we see for the full year that the marketcap to sales even adjusted with debt is relatively under valued to MRF and given that this is one of the F&O players where lot of hedging can be done through writing calls and writing puts. We think it makes lot of sense for range bound traders to venture into this stock for 20-25 percent return from next six months perspective and this is the basic rational that we have picked this particular stock." Disclosure: No personal positions but safe to assume that the above stock may have been recommended to clients.