Sharekhan recommended hold rating on Apollo Tyres with a target price of Rs 185 in its research report dated November 05, 2019.
Sharekhan's research report on Apollo Tyres
Apollo Tyres Ltd (ATL) Q2 FY20 results missed our estimates due to lower than anticipated topline and higher interest and depreciation expenses. Demand pressures are likely to sustain in near term given the demand weakness in domestic CV OEM’s European operations also under stress. Muted topline growth in intensive capex cycle would continue to put pressure in return ratios. ROCE to remain in 7-8% range thereby preventing re-rating.
Valuations at 12.3x FY21 earnings are at higher end of historical average multiples. Retain Hold with revised PT of Rs 185.
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