ICICI Direct Bets On This Tyre Stock For Potential 16% Gain In 1 Year, Gave 25% Return In 1 Month

ICICI Direct in its latest report has given buy call to the stock of Apollo Tyres Ltd for a potential gain of 16% in 1-year tenure with a target price of Rs 290 apiece.

Apollo Tyres Ltd Stock Outlook

The current market price of the stock is Rs 264 apiece with a 52-week high of 266 apiece and 52-week low of 165 apiece. According to ICICI Direct, if you buy the stock at current market price of Rs 250, it can surge to Rs 290 apiece with a potential gain of 16%."

Apollo Tyres Ltd Return

The stock has given a return of 12% in 1 week, 25% in 1 month, 22% in 3 months, and 19% in 1 year. The stock has fallen 2% in last 5 years.

Apollo Tyres Ltd Q1FY23 Results

The company posted a healthy operational performance. Total consolidated operating income was up 6.5% QoQ to Rs 5,942 crore. EBITDA came in at Rs 690 crore with margins up 40 bps QoQ to 11.6% and consolidated PAT at Rs 191 crore was up 68% QoQ.

Apollo Tyres Ltd Key triggers for future price performance

CV cyclical upswing, high radialisation levels, uptick in PV space, network expansion & healthy PV recovery in Europe to be major topline drivers. We expect consolidated sales to grow at a CAGR of 11.4% in FY22-24E.

With calibrated capex, debottlenecking of existing facilities & focus on capital efficiency RoE, RoCE is seen at 9.7%, 10.8% by FY24, respectively. Benign commodity price outlook amid recent cool off in crude prices along with operational efficiencies to result in 13.5% EBITDA margins by FY24E.

Apollo Tyres Ltd Valuation

ATL's stock price has remained largely flat from approximately Rs 257 levels in August 2017, underperforming the Nifty Auto Index in that time. According to ICICI Direct, "We retain our BUY rating on ATL amid strong intent on sweating of assets, controlled capex spends and return ratios focus for the business. Upgrading our estimates, we now value ATL at a target price of Rs 290 i.e., 6x FY24E EV/EBITDA (earlier target price: Rs 250)."

Apollo Tyres Ltd Market Capitalization

The tyre stock has a market capitalization of Rs 16,814.30 crore at the time of writing the story.

Apollo Tyres Ltd About

Apollo Tyres (ATL) is a leading tyre manufacturer, with operations in India & Europe with an installed capacity of ~7.9 lakh MTPA. In India, ATL has a substantial presence in TBR (31% market share) & PCR space (21% market share). Derives ~67% revenues from APMEA (largely India), ~32% from Europe.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.