Apollo Tyres shares rally 6% after strong performance in September quarter

Shares of Apollo Tyres Ltd rallied about 6 per cent during the trading session on Wednesday after the company reported a strong performance in the quarter ended on September 30, 2023. The company's bottomline surged sharply supported by a sharp fall in the cost of raw material.

Apollo Tyres reported a two-and-a-half-fold rise in consolidated net profit on a year-on-year (YoY) basis to Rs 474.26 crore in the September quarter, riding on higher revenue and lower raw material costs. The company had posted a consolidated net profit of Rs 179.39 crore in the same period last fiscal, said the tyre-maker.

Its consolidated revenue from operations during the September 2023 quarter under review grew slightly at Rs 6,279.67 crore as against Rs 5,956.05 crore in the year-ago period. It said that its cost of materials consumed was lower at Rs 2,634.92 crore in the second quarter of the current fiscal, as against Rs 3,101.56 crore in the same quarter previous financial year.

Following the announcement of earnings, shares of Apollo Tyres surged as much as 6 per cent to Rs 407.75 on Wednesday, with a total market capitalization close to Rs 26,000 crore. Stock had settled at Rs 385.30 apiece in the previous trading session on Tuesday.

EBITDA for Q2FY24 jumped 63 per cent YoY to Rs 1,159.8 crore from Rs 711.9 crore in the year ago period. The EBITDA margins for the July-September 2023 period came in at stood at 18.5 per cent, which was about 12 per cent in the year ago period.

Morgan Stanely remains 'neutral' on the stock. Global Brokerage firm maintained 'equal-weight' on Apollo Tyres with a target price at Rs 398 per share. Domestic brokerage firm Motitlal Oswal has buy rating on the stock, while Antique Stock Broking also has a similar rating on the stock with a target price of Rs 506. Detailed reports will be out after analysts' conference call due later today.

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