ICICI Direct Gives A Buy Call On Apollo Tyres With A Target Price of Rs. 335

In the latest report, ICICI Direct has given a buy call for Apollo Tyres with a target of Rs. 335. The stock has been surging rapidly over the previous few weeks, and it has the potential to go 22.26% more than the current market price.

Here is a breakdown of the latest report ICICI Direct on Apollo Tyres.

Outlook of Apollo Tyres (ATL)

Incorporated in 1972, Apollo Tyres is a company that manufactures automatic bias tubes and radial tyres. The company is a leading tyre manufacturer with operations in India and Europe. The company's product profile includes light truck, T&B, farm vehicle segments, and passenger cars and caters the product to replacement market and equipment manufacturers.

The stock's market capitalization is Rs. 17,481 Crore, with a current market price of Rs. 274. The stock is trading at its all-time highs, and its upside momentum looks good.

Buy Call of Apollo Tyres by ICICI Direct

According to the ICICI Direct report, "ATL is poised to benefit from its focus on capital efficiency, sweating of assets, controlled Capex spends, healthy FCF generation & deleveraging of b/s. With a debt reduction, RoCE at ATL is double-digit by FY24E."

"We retain our BUY rating on ATL amid a strong focus on capital efficiency, controlled Capex spends, and healthy margin recovery for the base business. Upgrading our margin estimates, we now value ATL at a target price of Rs. 335," says the latest report further.

Key triggers for future performance of the stock

There are two key triggers for the stock's future price performance, per the latest report of ICICI Direct. The report mentions,
• "With topline drivers in place for domestic operations and healthy PV recovery in Europe, we expect sales to grow at a CAGR of 11.4% FY22-24E.

• Target to achieve revenues of $5 billion by FY2026, EBITDA margin of at least 15%, RoCE of 12-15% and net debt to EBITDA of less than 2x."