Buy Apollo Tyres; target of Rs 95: A C Choksi

A C Choksi is bullish on Apollo Tyres and has recommended buy rating on the stock with a target of Rs 95 in its May 12, 2012 research report.

“Apollo Tyres Ltd. is a leading manufacturer of tyres company in India with high performance. Head quarter is in Gurgaon. The company currently manufactures wide range of automotive tyres for ultra and high speeds passengers vehicles, truck and bus, farm, off-road etc. Company is also established in Europe and Africa. We expect Apollo Tyres Ltd. to perform well in upcoming quarters, thus we recommend the stock for the target of Rs 95.”

“Apollo Tyers is a leading player in domestic market in both the commercial and passenger vehicle tyres and also has best partnerships with automotive companies such as Tata Motors, GM, Hyundai, Audi, Mahindra etc. In coming years there is expectations of rising auto demands which will increase in demands of tyres. And also domestic market revenue grew by 48.58% in FY12 YoY. Company's revenue is segmented from Truck-Bus vehicle 43%, Passenger vehicles 33%, Light Truck 10%, Agriculture & Off-The-Road 10% and Others 4%. Passenger vehicles is more profitable product and it also contributes high ratio in revenue segmentation which helps company in enabling sustainable revenue and growth. Company generates 80% revenue from Replacement business and 20% from OEM. Replacement business is a high margin business and demand in this segment is expected to remain strong in coming years.”

“After the short term uptrend from Rs 54.25 to Rs 94.80, we saw a correction of Rs 18, which give us another chance to buy the stock for next Bull run. Apollo Tyre made double bottom in Feb, 2011&Aug, 2011, and it broke the trendline in upward direction with good volumes. In recent correction, price touched the trendline and bounced back towards north. We expect the buying momentum to continue till 95/100 levels. If we look at the Daily charts, Both RSI&MACDshow that the price may fall more from this level, but higher charts (Monthly, Quarterly&Yearly) are still bullish. Price is moving above both the 100 Daily Moving Average (DMA) and 200 DMA, which is at 76&68 respectively, also support the buy call on the stock,” says A C Choksi research report.

Institutional holding more than 40% in Indian cos

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