Apollo Tyres Q3 Results Review - Volatile Raw Material Costs Will Not Impact Margins: Nirmal Bang

Nirmal Bang Report

Apollo Tyre Ltd.'s revenue was in line with our estimate while Ebitda margin was 80 basis points higher than our estimate on the back of lower raw material costs and stringent cost measures. Profit after tax came in ~14% higher than our estimate.

The management indicated that freight costs have increased by 30-40% and transit time to Europe has increased by 13-14 days following the Red Sea crisis. The increase in freight costs will not have any adverse impact as the same is passed on to the dealers in Europe. Also, Apollo Tyre does not expect any adverse impact on its European operations due to the Red Sea crisis.

We maintain 'Buy' on Apollo Tyre with a target price of Rs 623, valuing it at 15 times December 25E earning per share.

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