Sharekhan Recommends To 'Buy' This Stock For +33% Returns, In 1 Year

Brokerage firm Sharekhan has recommended investors to buy Apollo Tyres Ltd.'s stocks with a potential upside of 33.64%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Apollo Tyres Ltd. is Rs. 217 The brokerage firm, Sharekhan has estimated a Target Price for the stock at Rs. 290. Hence the stock is expected to give a 33.64% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 217
Target Price	Rs. 290
1 year returns	33.64%

Company performance

Apollo Tyres Ltd. is expected to benefit from its strategy by deleveraging its balance sheet, capital utilization of more than 90% and focus on firm capital allocation and cash management in the medium term. The company's Consolidated net revenues were up 18.6% y-o-y to Rs. 5,077 crore, driven by 25% growth in India business and 6% (in Euro terms) growth in Europe business. EBITDA margin for Q2FY22 stood at 12.6%, an improvement of 20 bps q-o-q, led by robust operational performance of Europe business.

Comments by Sharekhan

According to Sharekhan, "Q2FY22 results beat our expectations, led by better-than-expected improvement in operational performance. We maintain our Buy rating on Apollo Tyres Limited with an unchanged PT of Rs. 290, led by the company's dominant positions in key markets, expected market share gains across segments, and attractive valuations. The stock trades attractively at P/E multiple of 9.1x and EV/EBITDA multiple of 4.5x its FY2023E estimates."

About the company

Apollo Tyres Ltd. is the second largest tyre manufacturer in India. Indian business contributes about 70% to revenue, while European business contributes about 30%. With its recent entry into the two-wheeler space, ATL has become a full-fledged tyre player present across automotive categories viz. passenger vehicles, commercial vehicles, and two wheelers.

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

(Also read: 'Buy' This Stock For +20% Upside In 1 Year: Sharekhan Recommends)