InvestorQ : Why is ICICI securities positive on Apollo Tyres?
Neelam Naik made post

Why is ICICI securities positive on Apollo Tyres?

Ria Jain answered.
2 weeks ago

Apollo Tyres with a market cap of Rs11,206 crore has recently got a buy call from ICICI Securities. Apollo Tyres is currently trading at a 28% discount to yearly peak price. ICICI Securities initiated a buy call on Apollo Tyres with target price of Rs305, hinting at upside of 71%. One of the reasons for this upgrade is the recovery in the OEM segment. Apollo has seen capacity utilization spike to 80%. Also 3-4% price hikes will partly cover additional cost pressures. However, pressure on the crude basket will keep input costs high.

Apollo Tyres is also witnessing demand pick-up in tipper, ICV segments, pushing up T&B tyre demand. The high capacity utilization will help the company to absorb growth profitably till FY24. The target of Rs305 implies 13X FY24 earnings on DCF valuations.