Apollo Tires’ share price has fallen 23% so far in 2022; analysts remain bullish, see up to 73% potential rally

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Apollo Tires’ share price has fallen 23% so far in 2022. However, analysts remain bullish and expect up to 73% upside going forward. Analysts say Apollo Tires is ready for the next stage of growth, with enough capacity to meet demand from India and Europe. Although near-term margin is expected to remain subdued, analysts expect the margin to gradually recover to sustainable levels beginning in the second half of FY23 due to the company’s ability to take upsides. progressive prices. Compared to its peers, Apollo Tires offers the best mix of earnings growth and cheap valuations, national brokerage firm Motilal Oswal Financial Services said in its report. Shares of Apollo Tires were trading at Rs 168, down 4% on NSE intraday.

Should you buy Apollo Tires shares?

Motilal Oswal: Buy
Target price: Rs 265; Up: 51%

Analysts at Motilal Oswal believe Apollo Tires is ready for the next stage of growth, with enough capacity to meet demand from India and Europe. “With the completion of capital expenditures for the UKTN Plant Phase II in FY23, increased capacity utilization will generate higher cash flow and further reduce its balance sheet. The stock is trading at 13.6x/8.7x consolidated EPS FY23E/FY24E. We value the stock at 12x EPS June 24th (v/s five/10-year average P/E multiple of around 16x/12x),” they said. The brokerage maintains a call to buy on the stock with a target price of 265 rupees per share, implying a 51% upside.

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Financial JM: Buy
Target price: Rs 300; Up: 70%

According to the brokerage firm’s report, Apollo Tires volumes in 1Q are expected to see a modest QoQ improvement. “While replacement segment demand holds, improving OEM segment demand should drive sequential growth. The headwind from commodity inflation is expected to continue and likely be offset by a) multiple rounds of price increases taken (APTY took a 3-4% increase in Q1) and b) cost reduction initiatives,” he said. Although near-term margin is expected to remain subdued, analysts from JM Financial Services expect a gradual margin recovery to sustainable levels from 2HFY23.The brokerage has maintained a “buy” call on the stock with a target price of Rs 300. domestic auto sales, a further increase in the cost of RM and the easing of tire import restrictions are the main upside risks.

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ICICI titles: Buy
Target Price: Rs 305, Upside: 73%

According to analysts at ICICI Securities, Apollo Tires is witnessing a recovery in demand in the tipper, ICV segments, thus increasing the demand for T&B tires. “Of a TBR capacity of approximately 1,000 TPD, current capacity utilization of approximately 75% gives APTY visibility into the growth absorbed in fiscal years 23-24E without investing in additional TBR capacity,” they said. The brokerage maintains a ‘buy’ rating on the stock with an unchanged target price based on the DCF of 305 rupees, implying 13 times 24e financial year earnings. A major reduction in the cost of RMB, an improvement in TBR replacement prices and above-expected revenue growth in the EU with an EBITDA margin of around 17-18% are the main upside risks for the company. ‘objective.

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(The stock recommendations in this story are from the respective research analysts and brokerage firms. FinancialExpress.com takes no responsibility for their investment advice. Investments in the capital markets are subject to rules and regulations. Please consult your investment advisor before investing.)

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