Earnings Outlook
Input costs may drag dn Apollo Tyres' Apr-Jun margins
This story was originally published at 13:38 IST on 22 July 2024
Register to read our real-time news.Informist, Monday, Jul 22, 2024
By Narayana Krishna
HYDERABAD - A spike in raw material costs is likely to impact Apollo Tyres Ltd's Apr-Jun net profit and margins, analysts said. The tyre manufacturer is likely to report a consolidated net profit of nearly 4 bln rupees, flat on-year and up 12% on-quarter. The company's revenue is seen up 2%--both on year and sequentially--at 63.6 bln rupees, according to an average of estimates of nine brokerages.
Analysts' estimates for the net profit are in the range of 3.4 bln rupees and 4.5 bln rupees. The lowest estimate is by brokerage Elara Securities, while the highest is by Nomura. Estimates for revenue are in the range of 61.9 bln rupees and 66.2 bln rupees, with the lowest estimate by Kotak Institutional Equities and the highest by Emkay Global.
The Haryana-based company has five plants in India, one in the Netherlands, and one in Hungary serving the European markets. The trucks and buses segment accounts for 42% of the company's total revenue, while 38% revenue comes from passenger vehicles, 8% from farm and off-highway segment, 6% from light commercial vehicles, and 5% from two-wheelers, the company said in a recent investor presentation.
Brokerage Emkay Global said the company's June quarter revenue is expected to grow 6% on year amid an improving demand scenario. HDFC Securities, which also expects 6% on-year revenue growth, said the India growth may be led by the replacement battery business, while the Europe business is likely to remain subdued. On the contrary, Motilal Oswal expects marginal revenue growth of 2% for the quarter due to weakness in the replacement battery business.
Most analysts expect Apollo Tyres' Apr-Jun earnings before interest, tax, depreciation and amortisation, or EBITDA, margins to shrink due to a rise in raw material costs. Prices of rubber, the key raw material for making tyres, increased 5% sequentially during the quarter, Motilal Oswal said.
An increase in input costs and higher other expenses due to extended producer responsibility, or EPR, norms related to environment management may drive a 130-basis-point contraction sequentially in the consolidated EBITDA margin to 15.9% despite price hikes, Motilal Oswal said.
Analysts' estimates for Apr-Jun EBITDA margin are in the range of 15.5–15.9%. According to the average of estimates from six brokerages, EBITDA is seen at 10.1 bln rupees, with estimates ranging from 9.4 bln to 10.7 bln rupees.
The company is yet to announce the date for its Apr-June earnings announcement. Analysts will look out for the company's commentary on the demand outlook for the India and Europe markets, as well as levers to improve margins. At 1225 IST, shares of Apollo Tyres traded 0.1% higher at 525.90 rupees on the National Stock Exchange.
Following are the Apr-Jun earnings estimates for Apollo Tyres from nine brokerage houses:
Broker name | Net Sales | Net Profit | EBITDA (in mln rupees) |
---(In mln rupees)--- | |||
Anand Rathi Share and Stock Brokers Ltd | 63,779.00 | 3,764.00 | --- |
Elara Securities (India) Pvt Ltd | 63,586.00 | 3,404.00 | 9,361.00 |
Emkay Global Financial Services Ltd | 66,193.00 | 4,160.00 | 10,458.00 |
HDFC Securities Ltd | 63,597.00 | 4,130.00 | ---- |
Kotak Institutional Equities | 61,942.00 | 3,674.00 | 9,798.00 |
Motilal Oswal Financial Services Ltd | 63,749.00 | 4,273.00 | 10,136.00 |
Nomura Equity Research | 65,376.00 | 4,547.00 | 10,662.00 |
Nuvama Wealth Management Ltd | 62,017.00 | 3,887.00 | 10,179.00 |
Sharekhan Ltd | 62,110.00 | 3,850.00 | ---- |
Average | 63,594.33 | 3,965.44 | 10,099.00 |
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Namrata Rao
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
