Apollo Tyres Ltd. has given a 230% return on a year on year basis as the Auto Ancillary Stocks have rallied on recovery of the Auto sales in the current financial year 2014-15. We had published the analysis on the stock at Rs.83 per share and the current market price of the stock is at Rs.211 per share.
Apollo Tyres is in the business of manufacture and sale of tyres since its inception in 1972. The company is the second largest tyre manufacturer in the country and a leader in the commercial vehicle segment of the Automobile Industry. The company has a manufacturing presence in Asia, Europe and Africa and exports to 118 countries. The manufacturing units in India are located at Trichur in Kerala and Vadodara in Gujarat. The company has a comprehensive product portfolio spread across passenger cars, light trucks, truck-bus and bicycle tyres, re-treading material and re-treaded tyres under the key brands of Apollo, Dunlop and Vredestein. The company has 16,000 employees with 9 manufacturing facilities with head-quarters in the city of Gurgaon in NCR.
The company generates 24% of revenues from OEMs and 76% of the revenues are generated from the replacement market. The Truck-Bus category contributes 48% to the revenues followed by Passenger Vehicles at 33%, Off Highway and Light Trucks at 9% each and other vehicles at 1%. The geographical segmentation of revenue shows domestic business contribution from India at 65% followed by Europe at 23% and South Africa at 12%. The capacity utilisation has been lower at 70-75% in FY 2013-14 in comparison to FY 2012-13 for the company. The management expects growth to be primarily generated from the radialisation of the Commercial Vehicles in India. The company has a market share of 23% in the radial tyres category. Fluctuation in the Raw material cost of Rubber coupled with currency volatility has a significant impact on the EBITDA margins of the company. Most of the OEMs internationally form the customer base of the company. The company faces competition from MRF, CEAT, JK Tyres and other companies in the domestic market of India.
The Company reported Sales of Rs.127946 million with an EBITDA of Rs.14567 million and a net profit of Rs.6126 million in FY 2012-13. The EBITDA margin was 11.4% and the net profit margin was 5% for FY 2012-13 period. The company reported a net profit of Rs.2195 million with revenues of Rs.34335 million for the quarter ended September 2013. The Earnings per share was reported at Rs.12.2 and the Return on Capital Employed (RoCE) was reported at 18.7% and the Return on Equity at 18% for FY 2012-13. The company has shown a CAGR of 22.25% in revenues and the net profit has grown at a CAGR of 17.86% from FY 2008 to FY 2013.
The company had a debt of Rs.22816 million at the end of FY 2012-13 with current market capitalization of Rs.42137 million and Enterprise Value of Rs.60878 million with a Price to Earnings multiple of 6.87 at Rs.83 per share. The Price to Book Value is 1.23 and the Market Capitalization to Sales ratio is 0.32. Apollo Tyres had last declared a dividend of 50.00% of Rs.0.5 per share for the year ended March 2013. The Promoters have a shareholding of 43.5% and the FIIs have a shareholding of 33.48% in the company.