Sharekhan is bullish on Apollo Tyres has recommended buy rating on the stock with a target price of Rs 230 in its research report dated June 26, 2019.
Sharekhan's research report on Apollo Tyres
The Government of India has levied a counter veiling duty (CVD) of 9.1% to 17.6% on truck and bus radial tyres imports originating from China. The duty is levied to offset the subsidies offered by China to its exporters, which enables them to price the tyres cheaper by ~20-25% as against Indian tyres. The move is unlikely to substantially benefit Indian tyre makers as CVD will be levied only in a very few instances where the rate of subsidization exceeds the rate of dumping. In most of cases, only anti dumping duty (which is already in force) will be levied. Nevertheless, ATL healthy show in domestic replacement segment and ramp up in Europe would make it the fastest growing tyre maker. Low Debt: Equity, reasonable P/E of 11xFY21earnings gives us comfort. We have retained our earnings estimates for FY20 and FY21.
We maintain Buy recommendation on the stock with an unchanged PT of Rs 230.
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