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Right horizons
CMP: Rs 62.90
Target: Rs 120
Apollo Tyres Ltd (APTY) reported revenue growth of 0.8 per cent to Rs 3,190 crore during Q1-FY14 over corresponding period previous year on the back of sluggish automobile market. Logistics companies and truck operators have postponed further additions in existing fleet capacity, which itself is under utilised and impacted APTY’s Bus-Truck tyre segment. Operating profit of the company recorded a moderate growth of 14.3 per cent to Rs 295 crore during Q1-FY14 y-o-y and outpaced the revenue growth on the back of 4 per cent y-o-y decline reported in raw material cost, which constitute about67 per cent of the total expenses and about 60 per cent of the total revenue. Decline in raw material cost happened due to further fall in rubber prices. Margin pressure, which is a recurrent theme across the automotive segment appears absent on the back of control on raw material costs — predominantly rubber prices which would remain stables.
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