Buy Apollo Tyres; target of Rs 350: ICICI Direct

ICICI Direct's research report on Apollo Tyres

Apollo Tyres (ATL) is a leading tyre manufacturer, with operations in India & Europe and an installed capacity of ~7.9 lakh MT per annum. In India, ATL has substantial presence in TBR (31% market share) & PCR space (21% market share) • Derives ~67% revenues from APMEA (largely India), ~32% from Europe • FY22 segment mix: Truck/bus ~43%, PV ~35%, OHT ~10%, others ~12%.

Outlook

We retain BUY on ATL amid focus on increasing profitability, sweating of assets, calibrated capex spends and gross margin expansion on the anvil. Upgrading our estimates, we now value ATL at a target price of Rs 350 i.e., 6x FY24E EV/EBITDA (earlier target price: Rs 335).

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