Apollo Tyres shares drop 4% despite 4-fold jump in Q4 profit. Here's why

Apollo Tyres shares fell 4 per cent in Wednesday's trade, probably on profit booking, as except for revenues, all other result parameters beat analyst estimates in the March quarter.

YES Securities said Apollo Tyres numbers came in better than Street estimates on all fronts. Motilal Oswal maintained its 'Buy' rating on the stock in a flash note, ahead of the company's conference call at 4 pm later in the day. This brokerage said Apollo Tyres' operating performance was in line but lower interest and tax drove profit beat.

Shares of Apollo Tyres rose 4.46 per cent to Rs 364.55 on BSE. The stock was up 15 per cent in the last 10 session and gained continuously in the previous five sessions.

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Motilal Oswal Securities said Apollo Tyres' consolidated revenue grew 12 per cent YoY to about Rs 6,250 crore against its expectations of Rs 6,320 crore; gross margin expanded 360 basis points to 43.4 per cent against its expectations of 39.8 per cent, supported by raw material cost tailwind.

Ebitda grew 59 per cent YoY to about Rs 1,000 crore against Motilal's estimate of Rs 970 crore while Ebitda margin at 16 per cent was also higher than Motilal's estimate of 15.4 per cent. Lower interest and tax boosted adjusted profit to about Rs 410 crore against an estimate of Rs 338 crore.

UBS has a buy rating on the stock with a target of Rs 370. Morgan Stanley has a target of Rs 400 on the stock.

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